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China-Singapore Financial Summit Discusses on Deepening Financial Cooperation for RMB Internationalization

By VIVIAN YANICHONGQING|Dec 01,2020

Heated discussions on the topic of Cross-border Financial Cooperation between China-ASEAN and RMB Internationalisation were in progress at the 2020 China-Singapore (Chongqing) Connectivity Initiative Financial Summit (CCI-FS) on the morning of November 24.

2020 saw a rapid growth in the cross-border use of RMB. Huo Yingli, Director of the Macroprudential Policy Bureau of the People’s Bank of China (PBOC), noted that RMB cross-border receipts and payments up during the first three quarters 2.9 trillion yuan, a year-on-year increase of 64%.

2020 saw a rapid growth in the cross-border use of RMB.

In 2019, Chongqing’s total imports and exports with ASEAN countries reached 108.6 billion yuan, climbing 43% on the year. ASEAN has become the top foreign trade partner of the city. From Q1 to Q3 2020, despite the impact from COVID-19, the total imports and exports between the two amounted to 83.6 billion yuan, a year-on-year rise of 6%.

Regional Comprehensive Economic Partnership (RCEP), a free trade agreement signed recently in Chongqing, will develop China-ASEAN into an area contributing great to the global economy’s incremental growth.

This will likely improve China and ASEAN countries’ influence in the international financial landscape and trigger industrial and supply chains’ rearrangement. Moreover, this will also drive the market demand for RMB internationalization.

There are signs that RMB is gaining more strategic advantages in ASEAN. Zhang Zhijian, Managing Director of the International Management Department of the UOB Group, said that in H1 2020, the world’s foreign direct investment plunged by almost 50% compared with the same period last year. However, that of Asia only dropped by 12%. Additionally, over half of global investment flew to this area.

Hu Bofei, Vice General Manager of the International Business Department of the China Construction Bank (CCB), introduced that during the first three quarters, the bank’s RMB settlement volume with the ASEAN countries grew by 36%, indicating that ASEAN has become a vital market for CCB to develop cross-border financial services and RMB businesses. More than 90% of the successful cases set up by CCB Malaysia have been settled in RMB.

It is also worth mentioning that from January to September 2020, China’s investment in ASEAN experienced a year-on-year rising of 76%. As a result, the latter overtook the EU to become the country’s biggest trade partner for the first time.

Su Ning, former Vice President of PBOC, said that cross-border payment under the current structure suffered from a long route, complicated formalities, and a high cost. Blockchain and other digital technologies can help realize end-to-end and real-time payment, streamlining relevant formalities, reducing costs, and shortening payment time. China and ASEAN countries should lead the construction of a cross-border payment system based on cutting-edge technologies.

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