DUBAI — Dubai has set the marks to benefit from the globalization of the Chinese currency Renminbi (RMB), as stakeholders expect a windfall in RMB trade due to the emirate’s strategic location between East and West.
Speaking at the one-day New Silk Road RMB International Forum, organized by the Agricultural Bank of China (ABC), Essa Kazim, governor of the banking free zone Dubai International Financial Center (DIFC), said the interest in bilateral trade between Arab and Chinese companies is increasing significantly.
He quoted a HSBC survey which states that 33 percent of businesses in the United Arab Emirates (UAE) plan to conduct their operation in Renminbi, which literally means “people’s money”.
At the forum, ABC Executive Vice-President Li Zhenjiang said that the Chinese economy presented lots of opportunities for cross-border RMB investment, and such investments have gained global popularity.
“Now over 160 overseas banks have access to the China interbank bond market. Six countries and regions are granted RQFII ( Renminbi qualified foreign institutional investor) quotas.” RQFII are quotes which allow foreign institutional investors to use offshore RMB funds to invest in Chinese capital markets and interbank bond markets within the approved quota.
Besides the ABC, the other three top Chinese banks — Industrial and Commercial Bank of China, Bank of China, and China Construction Bank — are all equipped with the highest DIFC license category, which Kazim said gave proof that banks in China have trust into the DIFC and in Dubai as a trade hub that links Europe and Africa on the one hand, and Central Asia and the Far East on the other.
Li said Dubai was now on par with global financial centers like New York, London and Hong Kong, as the Gulf Arab emirate offered “an open economy, efficient management and advanced infrastructure. “
He said that in September, the ABC successfully issued Emirates bond worth 11 billion RMB on the Middle East’s only international exchange Nasdaq Dubai, “demonstrating the high passion and strong confidence of the Middle East market toward RMB products.” The ABC vice-chairman said since the bank set up a branch in the DIFC, its asset size has grown by 500 percent, “with over 70 percent denominated in RMB.”
Li believes that Dubai will be another RMB hub.
“By forming stronger synergies in systems, markets, products etc., Dubai, Shanghai and Hong Kong will join hands and enhance their global influence as international financial centers,” he said.
More than 300,000 Chinese nationals now live in the UAE, and over 4,000 Chinese firms have branches in the Gulf Arab state, according to Chinese general consulate in Dubai.