The China–Indonesia Local Currency Settlement (LCT) mechanism is accelerating its on-the-ground implementation across China. In January 2026, the Tianjin Branch of Bank of China successfully completed the city's first bilateral LCT transaction, marking further regional expansion of the framework.

The transaction supported a key export project in which a Chinese trading company supplied soda ash production equipment to Indonesia. The project represents the first overseas deployment of the Hou's Soda Process in Indonesia and forms part of broader Belt and Road industrial cooperation. Under the LCT framework, Bank of China structured the settlement in renminbi (RMB), enabling the Indonesian buyer to pay in Indonesian rupiah while the Chinese exporter received RMB. The transaction was cleared via the Cross-Border Interbank Payment System (CIPS), reducing foreign exchange costs by over RMB 10,000 and mitigating exchange rate volatility risks.

The LCT framework was jointly launched by the People's Bank of China and Bank Indonesia in September 2025. It allows enterprises to conduct transactions in their respective local currencies across current account, capital account, and financial account activities. The mechanism aims to improve settlement efficiency, reduce dependency on third currencies, and hedge against exchange rate fluctuations.

Since its launch, implementation has progressed rapidly across multiple Chinese provinces:

• Guangxi (December 2025): Completed one of China's first LCT transactions. A spice import company in Yulin finalized an RMB–rupiah cross-border payment within 15 minutes through Bank of China's Yulin branch.

• Sichuan (Late 2025): Executed the first engineering-sector LCT transaction in the province, with direct RMB–rupiah conversion and remittance to Jakarta.

• Liaoning (Early January 2026): Completed the first LCT transaction in Northeast China.

• Tianjin (January 2026): Added a major equipment export case, expanding LCT application into industrial capacity cooperation.

The geographic spread indicates that the mechanism is transitioning from institutional launch to practical scaling.

To promote broader adoption, on November 10, 2025, a dedicated LCT promotion forum was held in Shanghai under the guidance of Bank Indonesia and the People's Bank of China. Jointly organized by the Indonesian Embassy in China and Industrial and Commercial Bank of China (ICBC), the forum—titled “Strengthening Financial Connectivity and Advancing Local Currency Cooperation between Indonesia and China”—attracted more than 300 representatives from government agencies, financial institutions, and enterprises from both countries.

The event reinforced bilateral financial dialogue and provided operational guidance for enterprises considering local currency settlement solutions.