China-Russia financial ties to pick up as business in both countries encouraged to use yuan-ruble payment systems

By Chen Qingqing in Vladivostok Source:Global Times Published: 2018/9/12 20:48:40

Progress to pick up in China-Russia financial ties

China-Russia cooperation in finance has been progressing smoothly but not at a high speed, and business from both countries are encouraged to use a yuan-ruble payment system in trade, a former Chinese central bank governor said on Wednesday. 

The two countries have been working in finance for three years including collaboration in stake fund investment and in payment systems, but "it's still not fast enough," Zhou Xiaochuan, former governor of the People's Bank of China (PBC), the country's central bank, told a panel discussion on Wednesday during the ongoing Eastern Economic Forum, held in Vladivostok, Russia. 

In October 2016, the PBC signed a currency swap deal worth 150 billion yuan ($21.8 billion) with its Russian counterpart to facilitate direct investment and bilateral trade, according to the website of the National Association of Financial Market Institutional Investors in China.

China also established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve efficiency of their two-way foreign exchange transactions, Reuters reported in October 2017. 

"For now, the payment mechanism is still not widely used among companies, which has room to grow," Zhou said. 

Some Chinese investors in the Russian Far East said a yuan-ruble payment system in foreign-trade settlement of transactions could reduce currency risks in trade.

"However, not many business partners are willing to use it," Wang Xiaodong, a businessman who has been investing in Vladivostok for two years, told the Global Times. 

With the internationalization of the Chinese yuan, a methanol-to-olefins project operated by China State Energy Engineering Corp in the Russian Far East is now yuan-denominated. "It is a good way to avoid the fluctuation of foreign exchange rates, as many Chinese companies investing overseas face low profits due to currency risks," said Liu Yunpeng, the company's vice president.

Seventy percent of Russia's total exports are settled in ruble, Russian President Vladimir Putin said at a plenary session of the EEF on Wednesday. "As the country is facing US sanctions, we'd like to use fewer US dollars," he said.

Newspaper headline: Progress to pick up in China-Russia financial ties

Posted in: ECONOMY

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