25 years of Singapore-China diplomatic relations

New joint project will boost S'pore's yuan-hub status

Industrial and Commercial Bank of China Singapore general manager Zhang Weiwu says Singapore serves as a base for Chinese companies to expand into South-east Asia, given its many competitive advantages.
Industrial and Commercial Bank of China Singapore general manager Zhang Weiwu says Singapore serves as a base for Chinese companies to expand into South-east Asia, given its many competitive advantages.ST PHOTO: NEO XIAOBIN

Singapore's fast-growing yuan links with China will only deepen and further boost the country's role as a leading offshore centre for dealing in the currency, said Industrial and Commercial Bank of China (ICBC).

The bank believes a major impetus will come during Chinese President Xi Jinping's visit today.

It is expected that the visit will include the announcement of the location of Singapore's next joint project with China, with one of three western cities - Chongqing, Chengdu and Xi'an - in the running.

While the exact details of this third government-to-government project are yet to be announced, it should still promote increasing currency links between the two countries, said Mr Zhang Weiwu, general manager of ICBC Singapore.

 
 

He pointed out that the two bilateral projects already under way - the Suzhou Industrial Park and the Sino-Singapore Tianjin Eco-city - have underpinned the expansion of yuan channels between Singapore and the cities of Suzhou and Tianjin.

Mr Zhang Weiwu says China's 'One Belt, One Road' initiative will present many opportunities for using the yuan in Singapore and across the region. The initiative seeks to build better connectivity along the maritime route that links South-east Asia to China and, in turn, bring a new wave of Chinese companies looking to invest in major infrastructure and development projects in the region. 

Mr Zhang hopes the central banks of China and Singapore will roll out "innovative yuan policies" for the new project, which is based on the theme of "modern connectivity and modern services".

"I'm only guessing but, for a start, they could extend the new rules to the third area, which will mean an even more widespread use of the yuan," said Mr Zhang in Mandarin.

New monetary rules already allow firms in Suzhou and Tianjin to borrow money from Singapore banks and to transfer funds back home from yuan bonds issued here.

ICBC is the only yuan-clearing bank in Singapore, so a new project will present opportunities for it to leverage on its competitive advantage to provide yuan liquidity and expand its range of yuan-denominated products. Last year, it was the first bank to complete cross-border yuan loans from Singapore to the Shanghai Free Trade Zone, Suzhou Industrial Park and Guangxi Financial Reform Pilot Zone.

Mr Zhang said China's "One Belt, One Road" initiative will also present many opportunities for using the yuan in Singapore and across the region.

The initiative seeks to build better connectivity along the maritime route that links South-east Asia to China and, in turn, bring a new wave of Chinese companies looking to invest in major infrastructure and development projects in the region.

"Singapore serves as a base for these companies to expand into South-east Asia, given its many competitive advantages, including being one of the most liveable cities, having the best business environment, as well as being a leading wealth-management hub and financial centre," said Mr Zhang.

Singapore is already the biggest offshore yuan hub outside of Greater China, so more economic activity, whether in the form of the new project or from other initiatives, will only cement its position, he added.

ICBC has seen sustained growth in its yuan-clearing volumes here. It cleared 47.1 trillion yuan (S$10.4 trillion) of transactions in the first nine months of this year, up 97 per cent from the same period last year.

Yuan deposits in Singapore rose 27 per cent year-on-year to 322 billion yuan in the three months to June 30, according to the Monetary Authority of Singapore.

"Singapore has risen to become China's second-biggest investment destination in the first eight months of this year," said Mr Zhang, referring to statistics from the Chinese Embassy. "I'm full of confidence that the depth and breadth of Singapore's bilateral trade and economic ties will grow deeper in the next 25 years."

kohping@sph.com.sg

A version of this article appeared in the print edition of The Straits Times on November 06, 2015, with the headline 'New joint project will boost S'pore's yuan-hub status'. Print Edition | Subscribe