China, ASEAN Negotiating Trade in RMB

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Oct. 25 – China is negotiating with ASEAN countries over settling trade in Chinese renminbi (RMB), Assistant to the Governor of the People’s Bank of China Jin Qi told reporters Saturday in Nanning during the third China-ASEAN Summit Forum on Financial Cooperation and Development.

“It (the agreement) is currently underway, but the exact time for signing the agreement will depend on the negotiation process.” Jin said, adding that ASEAN countries should sign bilateral currency swap agreements with China to boost bilateral financial cooperation.

Jin also called for efforts from China and ASEAN states to improve local currency exchange mechanisms, advance financial openness, as well as to work more closely together to avoid a regional economic crisis.

Currently, the 10 ASEAN states have established over 30 banks and financial institutions in China and, at the same time, Chinese financial enterprises have set up 11 divisions in ASEAN countries.

Statistics showed that in the first half of 2011 China had handled RMB957.57 billion (US$149.62 billion) in cross-border RMB trade, which accounted for 8.6 percent of the country’s total foreign trade during the period.

The RMB-based trade settlement agreement between China and ASEAN is likely to be signed late this year or early 2012, sources said. If the agreement is signed, there will be a significant increase in China-ASEAN economic cooperation in the future, Lian Ping, chief economist at the Chinese Bank of Communications told reporters.

“The U.S. dollar has been the dominant currency in payment and settlement in this region but will certainly become volatile in future,” said Lian. “If a stable currency like the renminbi can play a bigger role in the region, it will be good for both trade and regional financial stability.”

China has already signed bilateral currency swap agreements with three nations from ASEAN, namely Indonesia, Malaysia and Singapore. Malaysian Bank Negara and the People’s Bank of China inked the agreement involving RMB80 billion in February 2009. Last year, Indonesia and Singapore signed bilateral currency swap agreements with China in January and July, respectively.

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