Industrial and Commercial Bank of China has cleared more than 590bn yuan ($86bn) in transactions in Qatar in the nearly two years since it opened its clearing centre in the Gulf state, an executive told Reuters.
The move reflects a surge in trade and investment between China and Gulf Arab states in recent years, though most business between the two sides is still conducted in U.S. dollars.
The clearing centre was launched in June 2015 as the Middle East’s first location for clearing transactions in the yuan to promote business ties. A clearing centre can handle all parts of a currency transaction from when a commitment is made until it is settled, reducing costs and time taken for trading.
“ICBC Doha opens the door to China’s onshore RMB (yuan) and foreign exchange markets to local financial institutions, corporates and investors,” Zheng Chunyi, general manager of ICBC Doha, said in an interview.
“Our data shows that Qatar, the United Arab Emirates and Kuwait are the most active Middle East countries using the RMB clearing centre for direct payments with Chinese mainland and Hong Kong.”
Chunyi said trade between Gulf Cooperation Council countries and China had surged more than 600 per cent in the past decade, with Chinese investment in the Middle East reaching more than $160bn between 2005 and 2016.
The yuan has established itself as the most active currency used by the UAE and Qatar for direct payments with the Chinese mainland and Hong Kong, according to SWIFT data.
But most trade between the region and China is still denominated in dollars and China’s payments for its oil imports from the region are believed to be denominated in dollars, the main currency used in global oil trade.
“As the trade volume between China and the region continues to grow in a rapid pace, we are looking forward to seeing more and more usage of RMB in the region,” said Chunyi.
In a further move to boost commerce between the two sides, Agricultural Bank of China (AgBank) was last year given permission by China’s central bank to clear yuan transactions in the UAE.