$ 2 trillion trade: Renminbi gaining currency in Mideast

The Chinese currency, renminbi, is likely to be used for almost one-third of all imports and exports between China and the Middle East by 2015.
According to top HSBC officials, $ 2 trillion worth of trade transactions between China and the Middle East will be carried out using the renminbi within two years.
“I do see the renminbi increasing in significance in this part of the world, but I don’t see it taking over the dollar,” said Simon Cooper, deputy chairman and CEO of HSBC Middle East and North Africa. He was addressing a media round table in Dubai.
According to Dubai Chamber of Commerce and Industry statistics, annual trade between China and the UAE alone has expanded sixteen fold since 2002 to $ 40.4 billion.
About 60 percent of China’s total trade passes through the UAE, from where it is re-exported to Africa and Europe.
“The region has strong economic ties with China and increasingly some of that trade is going to be settled in renminbi,” said Cooper. The significance of renminbi currency is increasing. The renminbi transaction in the MENA was 12 percent in 2012 while it was only 3 percent in 2010.
HSBC was the first bank in the region to establish services specifically to assist with cross border renminbi trade transactions.
The bank is already offering the Yuan accounts in the UAE and Saudi Arabia.
HSBC had recently announced that it was launching Yuan account services in Qatar, Bahrain, Kuwait and Lebanon, allowing clients in those countries to settle cross-border trades and make term deposits in the currency.
It is noticeable that Chinese contractors often favor firms that agreed to perform transactions in their currency because payments in dollars often attracted an average 3 percent fees or surcharge.
When asked about the operations in Egypt, Cooper said that they had opened new branches in Egypt despite obstacles and changing of regimes.
Cooper said he expected Egypt to face “a tough” 2013 but that the medium- and long-term growth potential was the main reason for the bank to keep it presence there.
Francesca McDonagh, regional head of retail banking and wealth management of MENA, said Saudi Arabia, UAE and Egypt are priority markets for HSBC.
Georges Elhedery, HSBC head of global markets in the Middle East and North Africa, said the bank is is ‘reviewing’ its operations in Iraq.
” We are reviewing it — that means whether to keep it or not,” Elhedery added.