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DUBAI - The chief executive of the Hong Kong Monetary Authority Norman Chan said here late Monday growing trade relations between the Gulf Arab oil states and China triggered a surge in transactions in renminbi, adding the process was still in its early stages.
Chan, who stopped in Dubai on a road-show to promote Hong Kong as an offshore hub for renminbi trade, said that 30 percent of China's trade including re-exports and offshore trade was intermediated through Hong Kong. While renminbi trade in the Chinese mainland is restricted for foreign firms, "in Hong Kong there is no restriction for renminbi funds transfers for foreigners and any firm can open a renminbi account," said Chan.
He said that most of the trade from Gulf Arab countries in the Chinese currency was done by firms in the United Arab Emirates ( UAE) and Dubai in particular "because Dubai plays an important role as a gateway to all Gulf states," said Chan in an exclusive interview with Xinhua. Bilateral trade between the UAE and China grew 15-fold since 2000 to reach $37 billion.
The volume in renminbi trade conducted by local Arab firms and Chinese companies residing in the countries of the Gulf Co- operation Council GCC (Saudi Arabia, Kuwait, Bahrain, Qatar, UAE and Oman) was still low but it was growing fast, said Chan who added that trade between the UAE and China was expected to hit $100 billion by 2015.
As of now exports and imports done in renminbi by the UAE account for only 4 percent of the Gulf state's total foreign trade "but chances are high that this figure will rise to double-digit rates in the coming years," said Chan.
According to the Dubai Chamber of Commerce, some 2,500 Chinese firms reside in Dubai. China's largest bank ICBC and the Bank of China have branches in the Gulf Arab sheikhdom. Earlier in February 2012, the China central bank signed a currency swap deal with the UAE worth 35 billion yuan ($5.62 billion). " This agreement is proof that both sides are interested in intensifying financial and commercial relations," said Chan.
Companies buying goods from China or those which export goods to China can trade, borrow, issue bonds in renminbi and they can hedge easily through forwards and futures in the Chinese currency, explained Chan.