THE "One Belt, One Road" is a milestone development strategy and framework by the Chinese government, focusing on connectivity and cooperation between China and a number of countries in Eurasia. The plan comprises two components - the land-based "Silk Road Economic Belt" and the oceanic "21st-Century Maritime Silk Road".
The "One Belt, One Road" strategy will be instrumental in connecting the emerging economic potential of both the East Asian and European regions. Various initiatives had been implemented by the Chinese government to facilitate the execution of the strategy. These initiatives include the establishment of a number of supporting financial institutions, such as the Asia Infrastructure Investment Bank (AIIB), Silk Road Fund, and the New Development Bank. These institutions will be instrumental in facilitating infrastructure projects in developing countries and establishing mutually beneficial relationships.
The surge in the number of Chinese enterprises investing overseas on the premise of China's "Going Global" strategy, especially within the One Belt, One Road region, has been fuelling the demand for various offshore financing services from banks. Perhaps more significantly, this has also accelerated the recognition of the RMB as an international currency, facilitating the formation of an "RMB zone" along the world's longest economic corridor and providing enormous opportunities for the progress of RMB internationalisation.
Singapore marks an important focal point in the 21st-Century Maritime Silk Road, given its strategic position as the very first offshore RMB centre outside of Greater China. The city-state currently enjoys a strong bilateral relationship with China, courtesy of the frequent cooperation between the political and economic circles of both nations. Under the One Belt, One Road framework, Singapore is set to emerge as a prominent integrated platform for the financing of China's "Going Global" enterprises.
In 2015, ICBC supported 170 "Going Global" projects with a total financing amount of US$42.7 billion. ICBC Singapore alone accounted for the support of more than 30 One Belt, One Road-related projects since 2014 with a total financing amount exceeding US$1 billion. ICBC Singapore has 20 concurrent projects in the pipeline with a combined financing amount of approximately US$3 billion.
The burgeoning demand for integrated financial services and the increasing complexity of the nature of international businesses both coincided with the growth and ambitions of enterprises across the telecommunications, construction, mechanical engineering, marine aviation and energy sectors. ICBC Singapore has served as a one-stop shop for banking and financing solutions to satisfy these very needs.
Numerous additional efforts had been made by ICBC Singapore to support the One Belt One Road initiatives including a cross-border e-commerce platform - the ICBC E-mall Singapore pavilion, cash management, asset management, custodian services and the latest launch of the ICBC Shipping Finance Centre (Asia-Pacific), headquartered in Singapore.
Maintaining the enviable position as one of the top offshore RMB hubs, Singapore has hit a record volume of RMB 1.3 trillion cleared in cross-border transactions in 2015, representing 10.7 per cent of China's total overseas RMB activity. Since the designation of ICBC Singapore in May 2013 as the sole RMB clearing bank in Singapore, the cumulative clearing amount totalled RMB 120 trillion, reflecting the astonishing demand for RMB clearing in Singapore. Strategic cooperation between many multinational companies, both Chinese and local, contributed to the deepening of mutual trade and investment flows between the two countries.
Early this year, the Centre for RMB Internationalisation Studies (CRIS) - a partnership between Nanyang Technological University and the People's Bank of China - was also set up in Singapore with the full support of ICBC group. This marked the first joint centre set up outside China, dedicated to providing insights on the progress of RMB internationalisation for government institutions, commercial organisations, financial institutions and academic institutions.
With the rising economic prowess of China, the rise of RMB as an international currency is an inevitable result. Singapore, as one of the world's premier RMB offshore centres has much to gain from the elevated influence of the currency.
- This article was contributed by ICBC