SINGAPORE-CHINA RELATIONS WILL HELP CHINA EXPAND YUAN INTO ASEAN MARKETS
Deputy Prime Minister Teo Chee Hean said he held excellent discussions with his Chinese counterparts on his visit to China, which ended yesterday.
He made the visit from 26 to 28 October 2014 “at the invitation of Member of the Standing Committee of the Political Bureau of the Communist Party of China (CPC) Central Committee and Vice Premier Zhang Gaoli.”
He also co-chaired the “11th Joint Council for Bilateral Cooperation (JCBC) meeting with Vice Premier Zhang”. The meeting was intended to “discuss ways to deepen and broaden Singapore-China cooperation”.
Mr Teo also co-chaired meetings at the Suzhou Industrial Park and Tianjin Eco-City, which Singapore is jointly developing with China, to “review the progress made … and discuss the direction of future cooperation”.
At the meetings, Singapore and China announced a direct currency trading programme and also discussed other areas of cooperation in social governance and financial services.
China said, “The move is crucial for the formation of a direct exchange rate between the RMB (Renminbi) and the Singapore dollar” because “It will help reduce exchange costs for economic players and promote the use of each other’ s currency in bilateral trade and investment”.
China also said that it hopes that the direct currency trading programme with Singapore will “help the internationalization of RMB in Southeast Asia and the world”.
China has made similar trading arrangements with the US dollar, the Japanese yen, the Australian dollar, the British pound and New Zealand dollar.
In a research note by UOB, it said, “The potential of the yuan’s acceptance and usage in ASEAN should rise along with the increased influence of China as well, and the direct Singapore dollar and yuan trading could be a main catalyser.”
The Singapore government’s assistance to China “should boost the appeal of offshore yuan in the region” because of “Singapore’s role as a financial centre and the increased trade and investment linkages between ASEAN and China.”
China wants to see the RMB “take on a bigger role in the international market”.
Direct trading between the yuan and the Singapore dollar started yesterday.
It is expected to lower foreign exchange transaction costs and encourage greater use of the two currencies in cross-border trade and investments.
The meeting was also attended by Minister for National Development Khaw Boon Wan, Minister for Education Heng Swee Keat, Minister, Prime Minister’s Office, Second Minister for the Environment and Water Resources, and Second Minister for Foreign Affairs Ms Grace Fu, Minister for Social and Family Development and Second Minister for Defence Chan Chun Sing, Senior Minister of State for Trade and Industry and National Development Lee Yi Shyan, Senior Minister of State for Finance and Transport Mrs Josephine Teo and Minister of State for Trade and Industry Teo Ser Luck.
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