Yuan's role in global trade growing: StanChart

Standard Chartered Bank (China) chief executive officer Lim Cheng Teck said the renminbi, or yuan, was now the fourth-most-used currency in international trade, up from 35th in 2010, reflecting the global acceptance of the Chinese unit among international traders. 

Seven of China’s 10 major neighbouring countries – including Thailand – now track the yuan more closely than the US dollar, Lim said.

China has promoted the use of its currency through “dim sum bonds” – yuan-denominated bonds issued in Hong Kong. 

The expected increase in transactions between China and Asean countries will result in greater use of the Chinese currency in settlements, and Standard Chartered’s network could help clients in the region with this, Lim said.

The euro debt crisis has persuaded China to focus more on Asean countries. Moreover, China is transforming its economic structure, increasing import volumes in a bid to increase growth in gross domestic product by boosting domestic consumption. The bank projects China’s GDP will return to growth of 7-8 per cent over the next five years, and Thailand should benefit because China is its second-largest trading partner. 

China is expected to boost imports of computer parts and rubber from Thailand.

The economic giant currently has a balanced trade relationship with the Kingdom, with import and export levels growing at a similar pace. 

“We believe the policy of China is sustainable because domestic consumption accounts for 37 per cent of total GDP. Furthermore, growing urbanisation will drive spending,” Lim said.

Chinese direct investment in Thailand is expected to grow significantly. In 2011, investment was worth $700 million, up from $57 million in 2000.

The bank believes the upcoming leadership change in China will not affect trade with Asean countries because Beijing’s policies will be consistent. 

Lyn Kok, president and CEO of Standard Chartered Bank (Thai), added that Thailand remained attractive to foreign investors, despite having seen its regional ranking as a destination drop to fourth place behind Indonesia, Malaysia and Singapore because of recent political instability and last year’s floods. 

The bank believes Thailand will climb in the ranking soon, because the above factors are being resolved.