KARACHI: Speakers, at a seminar titled “RMB Prospects & Applications” hosted by the Industrial and Commercial Bank of China (ICBC) Pakistan, have said that RMB usage can mitigate the exchange rate risk among investment and trade activities.
ICBC Pakistan conducted this seminar on Tuesday with the prime objective of promoting awareness and understanding within the banking and business sectors of Pakistan about the key factors involved in utilizing the Chinese currency (RMB).
While addressing the seminar, ICBC Pakistan CEO Zhou Bo and deputy CEO Zhang Hongpeng, Deputy Governor State Bank of Pakistan (SBP) Dr Inayat Hussain said that trade through Chinese currency (RMB) is beneficial for the economies of Pakistan and China.
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He said that trade between China and Pakistan through RMB is gradually increasing and posted healthy growth during the past few years. In 2018, some 2.15 percent of imports from China were RMB dominated and now last year it rose to 15.27 percent; however, still the share of RMB in total imports is very small and there is scope of massive growth, he added.
The interactive session, attended by Yang Yundong, Consul General of China in Karachi, Yang Guangyuan, Counsellor Commercial of Consulate General of China in Karachi, Deputy Governor Dr Inayat Hussain SBP and about 150 top-level representatives from the banking industry and corporate sectors received a positive response as the attendees and speakers shared their insights of the industry and expressed their opinions about RMB prospects and applications in the future.
Zhao Yifei Director Treasury and FI Department ICBC Karachi Branch and Ms Zhang Shasha Director Cross-border RMB Division International Banking Division ICBC Head Office also give a detailed presentation. During the seminar, MoUs were also signed between the ICBC bank and GMA Motors, Power China, CRRC, Airlink and Huawei.
During the event, experts from ICBC introduced comprehensive policies, products and services, on-shore and off-shore markets of cross-border RMB business, as well as ICBC’s strengths in RMB clearing and market making.
The participants appreciated that increasing the use of RMB products will facilitate trade and investment with Chinese and international counterparties as it is relatively stable in value, convenient in clearing, and low in cost. RMB usage can also decrease the exchange rate risk among investment and trade activities.
Speakers said that the saving and circulation of the RMB in Pakistan will help to enhance the attractiveness of the country to Chinese Companies and people and to further close the commercial and trade exchanges between two friendly countries. The trade in RBM will also help to increase Pakistan’s employment, foreign exchange reserves and long-term tax revenue, they said.
Revealing the ICBC RMB business achievements in Pakistan, they informed that now, relying on ICBC’s RMB clearing system all large and medium-sized banks in Pakistan are able to provide RMB services. In addition, the annual RMB business transaction volume of ICBC Pakistan operation in 2022 was 594 times higher than 2014.
They informed that including the State Bank and Habib Bank Beijing Branch, there are now 674 financial institutions around the world have become RMB foreign spot members of the China Foreign Exchange Trade System (CFETS) within mainland China. They urged the Pakistani financial institutions to consider accessing the China CFETS.
Officials said that ICBC is making efforts to expand RMB circulation within Pakistan by developing the RMB deposit and investment products to become a financial option for the Pakistani government and enterprises. They said that Pakistani businessmen can make international trade settlement easier through RMB with lower forex risk.
Currently, the use of RMB to settle trade between China and Pakistan is rapidly increasing. Utilizing RMB as the currency for LC/ LG and collection of settlements can effectively mitigate exchange rate risks and also save on currency conversion costs, they added.
ICBC Pakistan, established in May 2011, is a leading foreign bank operating in branch mode, the RMB clearing bank designated by the People’s Bank of China, and the leading RMB market maker in Pakistan. Since its establishment, the bank has been committing to setting up a good relationship with local peers.
By leveraging the ICBC Group’s service network and business advantages, the bank provides high-quality and comprehensive financial services for Chinese and Pakistani customers and facilitates local economic and social development.
ICBC has set up more than 400 global units in 45 countries and regions outside the Chinese mainland. As a global banking giant, ICBC has set a precedent with its dedication to promoting the internationalization of RMB business. This initiative aligns seamlessly with its overarching goal of boosting bilateral trade and investment between China and its partnering nations.
This year marks the 10th anniversary Belt and Road Initiative (BRI) proposed by President Xi Jinping and also the 10th anniversary of the launch of China-Pakistan Economic Corridor (CPEC).
“The implementation of the Belt-and-Road Initiative and the rapid advancement of the China-Pakistan Economic Corridor (CPEC) have propelled bilateral economic and trade relations between China and Pakistan into new realms of collaboration. Consequently, the potential for the growth of RMB-related business in the Pakistani market is at an all-time high.”
Copyright Business Recorder, 2023
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