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Kunming financial center to further promote trade

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The Kunming cross-border renminbi financial service center was inaugurated on July 27 during the Dianchi summit for financial and monetary cooperation.Photo Source:China Daily

With a number of cross-border transportation facilities completed in recent years, Yunnan is a regional gateway for trade between China, Southeast Asia, South Asia and other regions.Photo Source:China Daily

Construction of a regional financial service center in Kunming will boost Yunnan's economic development and opening up to neighboring countries, said local experts.

An important trade region, Yunnan province was China's first to pioneer cross-border renminbi settlement in 2004.

The Kunming financial center is part of Yunnan's "gateway strategy," which aims to facilitate trade with South and Southeast Asian nations.

A number of facilities have already been completed or are under construction. They are expected to offer a shortcut for commodity flow between China and Southeast Asia, Northeast Asia and the Indian Ocean and other regions.

A three-phase plan

The Kunming financial center will be completed in three phases, said Hu Liequ, chief expert at Yunnan Foreign Financial Cooperation Research Center and professor at Yunnan University of Finance and Economics.

He explained that short-term goals concentrate on constructing the center by 2015.

Mid-term aims are to make Kunming a financial hub oriented to the Great Mekong Subregion, while long-term ambitions are to build the city into a pan-Asia financial service center.

"Building the Kunming financial center will be a breakthrough in establishing the strong financial support system in Yunnan that is critical to its gateway strategy," Hu said.

The move is also expected to boost regional cooperative programs such as the Great Mekong Sub-region and China-ASEAN free trade area.

Tourism, settlement

According to Chen Lijun, head of the Research Institute of South Asia at Yunnan Academy of Social Sciences, the new financial center will positively impact border tourism and trade, catering to the demands of both individuals and enterprises.

Renminbi is now the favored currency in border trades with countries like Myanmar, Vietnam, and Laos. It is popular for its convenience, and ability to lower trade costs and risks.

In the first three seasons of 2009, Yunnan received over 93 million tourists. Foreign visitors surpassed 2 million, up 15.6 percent from the previous year.

It is estimated that by 2015, Yunnan will receive 200 million visitors annually from home and broad, and generate 130 billion yuan in revenue due to Kunming's financial center.

Chen added that using cross-border renminbi settlement would also boost the internationalization of Chinese currency.

A positive impact

As early as 1994, a Yunnan Agriculture Bank of China branch signed a cross-border settlement contract with the Agriculture Bank of Vietnam.

Now, renminbi accounts for more than 90 percent of all cross-border settlements in Yunnan, replacing US dollars in the region.

Enlarging renminbi settlement pilot areas would strengthen China's status and impact in the global market, said Zhou Zhenhai, director of the Kunming branch of the People's Bank of China.

He added increased renminbi settlement would also boost foreign trade, increase stabilization of border regions, lower the growth rate of foreign exchange reserves and improve Yunnan's financial service standards.

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