Isra-Mart srl: China calls for trading in renminbi

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One of China's most senior bankers has called on Commonwealth countries to adopt the renminbi as the preferred currency of trade when dealing with the Middle Kingdom in order to simplify transactions and reduce foreign exchange and hedging costs.

Industrial and Commercial Bank of China executive vice-president Lili Wang, regarded as one of the most powerful women bankers in the world, told the Commonwealth Business Forum in Perth yesterday that 12 per cent of China's cross-border trade, worth 1.3 trillion renminbi ($191.3 billion) of transactions, was being settled in the Asian country's currency.

The figure was up from just 9 per cent at June 30 and rising fast, as evidenced by the fact that the level of renminbi-denominated foreign trade was more than 13 times higher than this time last year.

In July, Fortescue Metals Group, which sells most of its Pilbara iron ore to China and also buys much of its equipment from the country, announced a maiden transaction in the renminbi, just weeks after Rio Tinto floated the idea of settling iron ore prices, traditionally denominated in US dollars, in the first Chinese currency.

China's Government is relaxing rules governing the international use of its currency, and already analysts have forecast that the renminbi could become the world's third most-important currency, behind the US dollar and the euro.

In her address to the Commonwealth Business Forum yesterday, Madame Wang also called on member nations to help "break down barriers of trade protectionism".

It was a sentiment later echoed by her countryman, China Council for the Promotion of International Trade vice chairman Wang Jinzhen.

"China has continuously improved its business environment by revising, abolishing working out laws, rules and regulations including ones on the patents, trademarks and copyright," Mr Wang said.

"Also, China has lowered its average tariff rate from 16.3 per cent to down to 9.8 per cent, which is a bit higher than the world average of 6.8 per cent but much lower than most of the countries, including some developed countries, in the world."

Madame Wang and Mr Wang were part of a discussion, also featuring Fortescue's billionaire chairman Andrew Forest and Federal Trade Minister Craig Emerson, about China and the Commonwealth: Forging New Partnerships.
China's rampant economic growth, which has sparked the Australian resources boom, has also had a far-reaching impact in Africa. However, a delegate from Nigeria questioned the change in Chinese attitude towards Africa, describing a historic policy of funding everything from roads and airports to school desks to the "new profit-driven China".