China urges greater use of renminbi in PH mart

MANILA, Philippines–Despite tensions arising from the territorial row between the Philippines and China over a number of isles and rocks lying in the West Philippine Sea, the two countries are eyeing closer ties in the financial markets, officials said Tuesday night.

According to Zhao Jianhua, Beijing’s envoy to Manila, China’s growth would remain tied to the economic development of the East Asian region.

“Asia is a big family and China is a member of this family,” Zhao said in a speech at a forum organized by the Bank of China and the Embassy of China in the Philippines.

The ambassador said he himself was “very impressed” with the economic growth of the Philippines, which last year was second-fastest in Asia, next to China.

“I’m glad of China’s role in the growth of the Philippines,” Zhao said, citing that the former was the latter’s second-largest trading partner.

“China wants to be the No. 1 trading partner of the Philippines,” he added.

The flourishing trade relations between the two countries are expected to spill over to their respective financial markets, according to the Bank of China. The Chinese bank said in a statement that it was “urging an intensification of economic and monetary cooperation between [China and the Philippines] to avoid over-dependence on third-party currencies and other negative influences on trade and investment.”

The Bank of China is pitching to Filipino businessmen the wider use of the mainland’s renminbi (RMB) settlement program for cross-border trade, which was launched in 2009. To date, more than 220 countries globally have begun RMB settlement business with China.

In 2013, the RMB Transfer System (RTS) was jointly developed by Bank of China’s Manila branch with the Philippine Dealing System (PDS) to be the first currency for real-time cross-border clearing in the country as well as the second foreign currency after the US dollar that became available for real-time domestic clearing.

“Bank of China is looking forward to and is prepared to work with the BAP [Bankers Association of the Philippines] member-banks and PDS in co-developing the RMB-Philippine peso and RMB-US dollar trading market so as to provide the market efficiencies that should benefit the country’s traders and, eventually, investors,” it said, adding that the bank also expects local regulators to endorse this project in order to develop a multicurrency trading market in the Philippines.

As for the Department of Finance, it is also looking at tapping China’s dim sum bond market, which is being tapped by foreign investors restricted by China’s capital controls but want to be exposed to RMB-denominated assets.

“DOF is watching the dim sum market,” Finance Secretary Cesar V. Purisima said.