News

Kunming RMB center a step toward financial hub

By Li yingqing (China Daily)
Updated: 2010-08-03 07:49

The Yunnan Cross-Border Renminbi Settlement Center was announced at the Dianchi summit on monetary cooperation. Photos By Wu Jiachun

Yuan cross-border settlement to boost trade with Southeast Asia and beyond

The Kunming cross-border renminbi currency settlement center unveiled at the recent summit on monetary cooperation in the city is an important step in developing the capital of Yunnan into a pan-Asia financial services hub, according to a local official.

The center designed to facilitate foreign trade in the region will also offer strong support for Yunnan's strategy to become a regional trade and transport gateway, according to Qiu He, Party chief of Kunming, capital of the province.

"With the China-ASEAN Free Trade Area and the completion of a number of cross-border facilities, the city has seen increasing business with neighboring countries," Qiu said.

"Kunming is expecting to continue the momentum with more measures for trade and investment - offering better financial services is among them," Qiu said.

Zhang Zulin, mayor of Kunming, noted the development of a regional financial service hub is a long-term project.

Long-term plans

He said local authorities are now cooperating with the Financial Research Institute of the People's Bank of China to draft both medium and long-term plans for the city's financial development.

Although the plan is not complete, Zhang revealed that development of Kunming into a financial hub will be implemented in three steps.

First, the renminbi settlement center will extend its business network to 25 counties and cities along the border and improve connections with local banks.

The second step will extend the center's business network to the whole province and open operations in neighboring provinces and countries.

The long-term goal is to have a modern, multifunctional financial hub doing business across the globe in cross-border currency settlement, capital funding and investment, cash flow monitoring, information consultation and service outsourcing.

While attracting foreign banks to open operations in Kunming, it will also encourage domestic banks to use Kunming as a springboard to expand their businesses in Southeast Asia and South Asia.

Participants in the recent Kunming summit representing governments, banks, the media and the academic circles in the region offered their suggestions on how Kunming can develop into a regional financial hub.

Du Jinfu, vice-governor of the People's Bank of China - the nation's central bank - said the central bank will partner with other government bodies and research institutions to study new policies, services and management measures to promote renminbi settlement in Yunnan as well as the rest of the country.

Attention to SMEs

He suggested that the settlement center pay more attention to the small and medium-sized enterprises (SMEs).

"SMEs are now important in cross-border trade and investment and will be potential clients of the center. The center should offer more measures for them, help them reduce costs and expand businesses," he said.

Zhou Jiangong, editor-in-chief of the Chinese-language edition of the Forbes magazine, said the center should also note the emerging logistics business.

Blossoming sales?

He cited the Dounan Flower Market in Kunming.

"Called the largest flower distribution hub in China, Dounan only has annual sales worth several hundred million yuan, compared with the multi-billion euro market in the Netherlands. If the center can help solve the currency settlement problem, its sales can increase substantially."

Also of great importance is the Lusiwan Commodities Center, a development in Kunming oriented toward Southeast Asia set to attract about 90,000 firms. With the help of a renminbi settlement center, the facility is expected to develop a huge logistics network reaching into neighboring countries.

Mushtaq Khan, chief economic adviser of the State Bank of Pakistan, said Kunming has the geographic advantage to become a regional hub.

But he noted coordination between governments, either central or local, is crucial for Kunming to become a real currency settlement center.

Representatives of China's major banks, including Bank of China President Li Lihui and Agricultural Bank of China President Zhang Yun, have all expressed their support to the currency settlement center, promising to open more such outlets and offering assistances in technologies and personnel training.

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(China Daily 08/03/2010 page15)