JOHANNESBURG, July 7 -- China's central bank on Tuesday signed a memorandum of understanding (MOU) with its South African counterpart to set up a yuan clearing system in South Africa.

The MOU is for the purposes of clearing and settlement of yuan in South Africa, said the South African Reserve Bank (SARB).

"Both central banks agreed to coordinate and cooperate on the supervision, oversight and clearing of renminbi (Chinese currency) in South Africa and also to exchange information in order to facilitate the continuous improvement and development of bilateral trade," said Candice Jeffreys, Media Coordinator of the SARB.

The MOU marks another important milestone through joint efforts to build capabilities in South Africa's financial markets to better serve bilateral trade, investment and financial flows between China and South Africa, Jeffreys said.

China is now South Africa's largest export partner.

The move will expand the list of countries with direct access to trade in the Chinese currency.