Bilateral trade and investment expansion eyed

Chinese and European Union banks hope to tap the opportunities to help expand bilateral trade and investment, such as through green financing and cross-border RMB business.

Speaking at a seminar on cross-border RMB and beyond in Luxembourg on Friday, Xu Chen, chairman of the Bank of China Europe SA, said the great progress in RMB internationalization in recent years not only symbolizes China's growing influence on the global stage, but also offers new avenues for economic partnership between China and Europe.

"The RMB's journey from a national currency to one of the world's leading currencies for trade, investment and reserves reflects our shared commitment to fostering a more diversified and resilient global financial system," said Xu, who is also chairman of the China Chamber of Commerce to the EU, or CCCEU.

The CCCEU unveiled its finance working group on Friday, in addition to the two existing digital and green groups.

Xu said there is great potential for cooperation between China and the EU in areas such as green economy, technological innovation, and addressing global challenges.

"Our cooperation, therefore, is not just beneficial but essential, for sustainable growth and stability worldwide," he said.

The 2023-24 CCCEU annual report showed that Chinese companies' overall rating of the EU business environment had declined for the fourth year. But Chinese companies still remain largely "optimistic and enthusiastic" in their operation in the EU and see huge potential in cooperation in green and digital areas.

Xu said the adoption of the RMB in cross-border transactions presents unparalleled opportunities for European and Chinese businesses.

"It offers a more direct, cost-effective, and efficient means of conducting trade and investment activities, reducing the dependency on third-party currencies and enhancing financial efficiency," he said.

He also noted the challenges ahead for deeper financial integration and collaboration between the two sides, such as regulatory differences, market access restrictions and the need for enhanced financial infrastructure.

Hua Ning, China's ambassador to Luxembourg, said China has created the world's biggest banking sector and second-largest insurance market.

"That means expanding financial opening-up not just helps drive the high-quality development of China's economic growth, grow its financial sector, and create a new paradigm of development, more importantly, it is a way for the international financial industry to surmount challenges and sustain growth," he said.

He gave a long list of China's efforts in recent years in high-standard financial opening-up, such as the removal of various quota restrictions for various foreign financial firms.

At the 10th China-EU High-Level Economic and Trade Dialogue held in Beijing in September, the two sides proposed setting up a ministerial-level finance working group and agreed to strengthen cooperation on green finance, two-way financial opening-up and financial regulation, and to work together to respond to global economic and financial challenges.

High-standard opening-up

"We'd like to see more companies from Europe, including Luxembourg, make their way to China's high-standard financial opening-up and share development opportunities," Hua said.

Qiu Yunping, president of Deutsche Bank (China), said the RMB has gained popularity, citing the fact that the RMB surpassed the US dollar for the first time in March 2023, and became the dominant currency in China's own cross-border payments.

He said China's transition to a sustainable economy is an opportunity for companies and investors, a core part of Deutsche Bank's sustainability strategy, adding that the bank is active in participating in green financing in China.

"We believe continued business ties between these two geographies are mutually beneficial to the development of the global economy," he said via video link.

Liang Jian, head of China market at the Banque Internationale in Luxembourg, said the bank has set up a China market team, focusing on building a bridge for Chinese clients coming to Europe and vice versa to help European clients enter the Chinese market.

"We are willing to be a gateway to Chinese and European markets for our clients," she said.