Cheng Jun, general manager, global trade services, Bank of China, says One Belt, One Road will expand China’s role in international finance.
Global Finance: What are your predictions for the growing internationalism of the renminbi and its role in global trade?
Cheng Jun: The internationalism of the renminbi has provided the trade and finance market with more choice of products and services. In 2016, we will continue to promote the internationalization of the renminbi. The latest five-year plan lays out a strategy that includes market-oriented reforms of exchange and interest rates, the expansion of financial sector liberalization, pushing the renminbi to become a convertible, freely usable currency, promoting the usage of the currency in the ports and border regions and the Belt and Road areas, and accelerating implementation of the FTA [Free Trade Agreement] strategy as a platform to drive international usage of renminbi. In October 2016, the renminbi will officially join the SDR [special drawing rights] basket of currencies, enabling central banks, sovereign wealth funds and market investors to further increase the allocation of renminbi assets, which will bring our bank new development opportunities related to the expansion of renminbi internationalization.
GF: How will Bank of China’s trade finance be driven by the One Belt, One Road* initiative?
Cheng: The continuous advance of OBOR strategy will increasingly encourage trade, investment, mergers and acquisitions and other economic activity along the OBOR area. Bank of China takes full advantage of internationalization to support “going out” enterprises [companies following China’s “Go Out” policy of seeking foreign investment] to expand the market along the Belt and Road. In the first 10 months of 2015, overseas institutions of the Bank of China along the Belt and Road achieved international settlement volume of $210 billion and cross-border renminbi settlement of more than 420 billion. Domestic branches of Bank of China recorded letter of credit volume of $23 billion and letter of guarantee volume of over $6.5 billion with countries along the Belt and Road. Bank of China has played an important role in facilitating trade activities in these areas. In June and November of 2015, the Bank of China organized two meetings in Chongqing and Düsseldorf to promote projects of international trade clients from Chongqing and Xinjiang, China, and European countries. Hundreds of entrepreneurs attended the meetings and dozens of letters of intent were signed, including many four-party agreements and memos. We earned lots of business in new accounts, deposits, settlement and finance.
GF: How is Bank of China countering e-finance groups like Baidu, Alibaba and Tencent?
Cheng: Faced with the wave of Internet + [a broad term for China’s strategy to harness the Internet], Bank of China uses its traditional strengths and in-depth collaboration with e-business companies to accelerate Internet and trade-finance product innovation to be at the vanguard of Internet business development.
* One Belt, One Road is an economic land belt including countries in Central Asia, West Asia, the Middle East and Europe (the original Silk Road) and amaritime pathlinking China’s ports with Africa, the Suez Canal and the Mediterranean.