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Yuan-clearing bank in sight

October 14, 2013

CHINA is considering setting up a yuan-clearing bank in Thailand to meet demand for currency settlement between the two countries, Premier Li Keqiang said last Friday.

The move is to encourage more trade settlement in the yuan between businesses from the two nations, Li said during a speech to the Thai parliament.

The bank will help meet the target of annual bilateral trade of $100 billion between China and Thailand in 2015, a goal mentioned by Li and his Thai counterpart Yingluck Shinawatra during a news conference after their official meeting.

Yang Baoyun, a professor of Southeast Asian studies at Peking University, said the new clearance bank and a currency swap deal would free businesses and entrepreneurs from the trouble of currency exchanges. Bilateral trade has prospered, with the volume reaching nearly $70 billion last year.

China is now Thailand’s largest trading partner, while Thailand is China’s second-largest trading partner in the 10-member Association of Southeast Asian Nations.

It is time for the two sides to quickly draw up measures to achieve an early start, Yang said. A yuan clearing bank in Thailand would be in line with increasing circulation of the Chinese currency in Southeast Asian nations.

The volume of bilateral swap agreements between China and ASEAN has reached 1.4 trillion yuan ($228 billion), while yuan-denominated cross-border settlements reached 1.12 trillion yuan by June this year.

The figures come from Yi Gang, deputy governor of the People’s Bank of China and head of the State Administration of Foreign Exchange.

Jin Canrong, an international affairs professor at Renmin University of China, said the programme announced on last Friday serves as part of China’s financial diplomacy, a recent highlight of the nation’s foreign policies. This financial progress is making China’s development a driving force to benefit neighbours, and “will further boost connectivity-building and economic integration in the region”, Jin said.

China and Thailand also reached a consensus on last Friday on the signing of a Memorandum of Understanding on visa exemption for regular travelers between the two nations, Li and Yingluck told reporters.

By arrangement with China Daily/ANN