Figure 2: RMB’s share as a global payments currency USD
1 2 3 4 5 6 7 8 9
11 14 17 20
EUR GBP JPY CNY CAD AUD HKD SGD
10 THB SEK
12 CHF 13 NOK PLN
15 DKK 16 MYR ZAR
18 NZD 19 MXN CZK
0.23% 0.19% 0.34% 0.31%
Note: Live and delivered, MT 103 and MT 202 (customer-initiated and institutional payments). Messages
exchanged on SWIFT (based on value) Source: SWIFT BI
0.61%
0.36% 0.36%
0.72% 0.71% 0.65% 6.47% 2.80% 2.20% 1.85% 1.53% 1.11% 0.97% 0.81%
41.07% 35.36%
solutions as they expand into emerging markets, Deutsche Bank developed a one- stop solution to address funding and risk management needs. Deploying the GEM Connect one-stop workflow automation solution for treasurers in emerging markets (launched in March 2021), the bank helped SANY Group, a leading Chinese construction and engineering machinery manufacturer, improve the efficiency of its intercompany payment settlements and reduce manual processes, thus playing a key role in SANY’s globalisation strategy.
than not, we are talking about automation and standardisation with clients instead.” Keen to benefit from digitised and paperless payment workflows and merchant solutions, corporate treasurers are helping to drive the digital revolution, transforming traditional economic models. This is true around the world, but it is particularly prevalent in China, where e-commerce and payment channels – such as Alipay
People have been increasingly looking at asset diversification
Tony Chao, Head of Securities Services China, Deutsche Bank
and WeChat – are very popular. “We are seeing a rapid move to online business models across sectors,” says Huang. “We have launched several different merchant solutions to meet the needs of the digital corporate treasurer, such as solutions designed to help our multinational corporate clients who are managing an online store or setting up self-managed online stores.” The internationalisation of China’s economy has also led to new currency flows in corporate treasury. While RMB is still the dominant currency flow, euro flows are gaining popularity in China. However, low euro interest rates have caused problems for banks around the world, incurring costs to place money with central banks overnight. As Huang notes, “Corporate treasury clients in China aren’t happy to be charged for placing euro overnight deposits, so we are setting up an automated FX solution so that corporates with euros can automatically convert their holdings into RMB.” Given the demand from Chinese corporates for cash management, FX and trade finance
12
Trade powerhouse Before China’s economy opened up in 1978, its share of global trade stood at less than 1%. As helpfully explained by UNCTAD, in 1986, to enhance and secure access to foreign markets for its growing exports, China applied to join the General Agreement on Tariffs and Trade. However, it was 15 years before China could formally connect to the multilateral trading system. During these years, China’s share of global trade gradually increased but its participation in the global economy remained well below its potential. But as globalisation took off, along with the emergence of global value chains, China rose to become the world’s number one exporter by 2010, helped by its accession to the World Trade Organization in 2001. China’s pivotal position in the production of metals and minerals has, however, become a source of concern among other economies in a geopolitical landscape that is moving away from globalisation. Of the 30 critical raw materials that the European Commission identifies, 10 are mostly sourced from China and eight from the African continent, where China increasingly invests in commodity-related infrastructure. Within this group are the metals and minerals needed to produce electric vehicles and the renewable energy equipment that will enable economies to transition away from fossil fuels. “Decarbonisation is becoming a material demand driver for several metals, such as aluminium, copper and lithium,” noted Deutsche Bank Research in January 2022. China is the world’s largest aluminium producer, with an output of 38.5 million metric tons in 2021. As for financing trade, it remains complex because of the various controls in place. Two years ago, Bank of China’s Yunfei Liu told flow that handling cross-border transactions in China means getting comfortable with more than 200 sets of rules, the majority of which come from the State Administration of Foreign Exchange, with a few from the PBOC.
Photography: Alamy, Deutsche Bank
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