Guangxi's open door ushers in ASEAN business

Without the open financial door created by South China's Guangxi Zhuang autonomous region, which connects China and member states of the Association of Southeast Asian Nations, Yan Jiehe's company could not have achieved success overseas.

The open financial door policy offered him great help in cross-border trade. He attended the 2017 China-ASEAN Expo, at which he met with a private company from Malaysia and cooperated in a 2.5 billion yuan ($354 million) project.

"Later on, with Guangxi's efforts in promoting trade and financial cooperation, our project was further introduced to Vietnam, Cambodia, Thailand and Myanmar, achieving great success," said Yan, founder of China Pacific Construction Group.

Yan attributed the company's success with ASEAN to the newly built open financial door that connects China and ASEAN member states.

"The application process of cross-border trade was simplified, cutting the processing time to a great extent. The trade settlement interconnection platform was improved, enabling RMB to be a settlement currency. And the government offered favorable policies, alleviating financing difficulty," he said.

Guangxi - an important region linking China and the ASEAN member states by land and sea - is currently focused on promoting cross-border financial business innovation, as well as building major financial platforms and improving cross-border financial exchange and cooperation mechanisms, in order to build a China-ASEAN financial area, said Chen Wu, the governor of Guangxi.

In December last year, the State Council, China's Cabinet, approved a guideline issued by the People's Bank of China, the central bank, as well as 12 other government authorities for the open financial door in Guangxi, which connects China and ASEAN. This marked the plan's official elevation to a national strategy.

"Building up the open financial door is the first provincial-level financial opening strategy approved by the central government since the 19th National Congress of the Communist Party of China (in October 2017), with a goal of deepening China-ASEAN cooperation and further building the Belt and Road," said Chen.

With the three major missions of "serving the real economy, preventing financial risks, and deepening financial reform", the guideline aims to promote renminbi application in cross-border transactions between China and ASEAN, as well as deepening the reform of the financial system and mechanism, strengthening the financial cooperation between China and ASEAN, and facilitating the construction of the newly established New International Land-Sea Trade Corridor.

The trade corridor is a trade and logistics passage jointly built by western Chinese provincial-level regions and Singapore under the framework of the China-Singapore (Chongqing) Demonstration Initiative on Strategic Connectivity.

Specifically, the guideline instructed that in five years, an economic and financial cooperation corridor open to ASEAN should be basically established, the cross-border financial cooperation and exchange mechanism and financial risk prevention and control mechanism should be improved, and the services of RMB cross-border settlement, currency trading and cross-border investment and financing offered to ASEAN member states should be strengthened.

"The use of RMB as a settlement currency is becoming a trend in cross-border trade. It decreases transaction risks, improves trade efficiency and enhances trust and exchange among the region. China, together with ASEAN members, has been promoting RMB settlement," said Phetsathaphone Keovongvichith, the director-general and board chairman of Bank of the Lao PDR.

"Laos and China are very important trade partners. In past years, we had much cooperation, especially in the financial area. Our financial industry reached an average annual growth rate of 12.3 percent," he said.

During the recently concluded 16th China-ASEAN Expo in Nanning, the capital of Guangxi, a series of strategic agreements between financial institutions from China and ASEAN member states were made, aimed at further facilitating financial cooperation between China and ASEAN. The Southeast Asia operation center of Bank of China (Hong Kong) and the ASEAN insurance service center of China Taiping Insurance Group Ltd were also launched in Nanning.

According to BOC (Hong Kong), the operation center will accelerate the process of RMB internationalization and offer operational service support to BOC's branches in Hong Kong and Southeast Asia.

Fu Yuanjia, executive vice-president of the Guangxi Qinzhou Development Research Institute, said, "RMB internationalization plays an important role in enhancing the connectivity between China and ASEAN, especially in terms of financing, economic policy and international trade."

Meanwhile, China Taiping Insurance serves as an international platform for cross-border business in ASEAN member states. Specifically, it will strengthen exchanges and cooperation between Guangxi and ASEAN members, especially in the fields of insurance, pension and investment.

In addition, it can provide risk guidance for Chinese enterprises to participate in ASEAN member states' infrastructure construction, technical cooperation, economic and trade services, and cultural exchanges, according to the company.

"Guangxi, as an important region of China's financial opening-up, is willing to join hands with ASEAN member states, to grasp opportunities brought by the Belt and Road Initiative, and to deepen exchanges and cooperation in finance and trade," said Chen, the region's governor.

Chea Chanto, the governor of National Bank of Cambodia, said that with the newly created open financial door, cross-border e-commerce between China and Cambodia has been further strengthened.

"Currently, China's WeChat Pay, Alipay and UnionPay are available in Cambodia, offering convenience to Chinese tourists to our country. And we are considering building a unified payment system among China and ASEAN, strengthening cross-border settlement infrastructure construction," he said.

According to Yang Jinbai, vice-chairman of Guangxi, the region is now stepping up efforts to build a group of major financial platforms, establish an international financial big data center to serve ASEAN, and promote social credit system construction.

Yang said that ever since the approval of the guideline on establishing the open financial door, the region has achieved healthy economic and financial development.

Data from the regional financial administration of Guangxi showed that from January to May, the region's RMB cross-border payment amount surged 91.5 percent year-on-year to 66.8 billion yuan, accounting for 47.6 percent of the region's total domestic and foreign currency transactions.

In the first quarter this year, Guangxi's economy had shown a more entrenched trend of stable growth. Its gross regional product reached 422.5 billion yuan, growing 6.4 percent year-on-year, and the financial sector grew 7.1 percent year-on-year, according to Guangxi's regional financial administration.

Vachira Arromdee, assistant president at Bank of Thailand, said that "at present, building up the China-ASEAN open financial door for a shared future is an important topic, as a healthy and well-operated financial system is the prerequisite for promoting sustainable economic development."

She added that China and ASEAN should collaborate on soft and physical infrastructure in order to achieve connectivity, enhance financial capabilities and create more opportunities for regional development.