As China drives intra-Asian trade and economic expansion, trade settlement in its currency is gaining momentum globally.
Stronger domestic consumption and intra-regional trade have emerged as two major drivers of economic growth in Asia. China’s large role in regional growth has led to increasing acceptance of the renminbi RMB in trade settlement, and it could one day become a regional currency, says HSBC.
“The outlook for Asian trade is positive. HSBC forecasts that trade in the region will grow at an average of 5.4% annually from now until 2016. Additionally, between now and 2026, trade in Asia will grow as much as 129%, outpacing global trade growth of 98%,”
said Huynh Buu Quang, the bank’s head of global trade and receivables finance for Asia-Pacific. Intra-regional trade currently accounts for 50% of all trade in Asia Pacific, which is also seeing its share rise rapidly with other emerging markets, Brazil in particular, he said. In 1990, trade in Asia was only about 8% of the global total.
By 2010 the figure had reached 18%, and HSBC forecasts it will reach 39% by 2030, spurred by rising household incomes and domestic demand.“Trade in Asia, including Asean, is expected grow fast despite the uncertainty we see in Europe and the United States,” Mr Quang said during a recent briefing in Bangkok.
“China will continue to play its central role and yuan settlement will be gaining more momentum throughout the region.”
The global use of the yuan as a trade settlement currency is clearly on the rise, and offshore payments are increasingly taking place outside Hong Kong. China’s total international trade last year was worth US$3.5 trillion and about 10% was settled in renminbi.