Mauritius Renminbi Clearing Centre launched
Mauritius' spearheaded economic and trade policies has constantly been pro-trade and investment focused. It combines a favourable business climate, stable democracy, macroeconomic stability, a fully liberalised financial sector, reliable banking system, low taxes and an educated bi-lingual workforce. During the recently held "Mauritius–China Economic Cooperation Forum" on December 7, 2022 in Mauritius, the Minister of Finance, Economic Planning and Development, Dr the Honourable Renganaden Padayachy reiterated his commitment with regards to the forthcoming launch of a Renminbi Clearing Centre that was previously announced during the Mauritian National 2022-2023 budget in June 2022.
On December 16 2022, to capitalize on the previous announcements, the Renminbi Clearing Centre was officially launched during a ceremony held at the Bank of Mauritius(BoM). China's place in the economic arena elevated the Renminbi to being among the top 5 most used currency in the world. The Bank of Mauritius is the settlement bank for the COMESA REPSS (Regional Payment and Settlement System) and Mauritius is also a member of the SADC RTGS (regional cross-border real-time gross settlement) and the PAPSS (Pan-African Payment and Settlement System), which are regional payment systems in Africa. Moreover, The Government of Mauritius has signed Double Taxation Avoidance Agreements (DTAAs) with 16 African countries/regions and maintains a well-regarded legal and regulatory framework. Thus, the Mauritius payment infrastructure, combined with the prevailing DTAAs and the Mauritius-China Free Trade Agreement (MCFTA), positions Mauritius as the optimum hub to providing Renminbi clearing facilities/services regionally and possibly enable its further development into one of the top global offshore Renminbi Clearing Centers on the long term.
China has been Africa's largest trading partner for the past 10 years and bilateral trade rose to a record high of ＄254 billion last year. Currently, only 3 percent of the bilateral trade is conducted in Renminbi, with The African Continental Free Trade Area (AfCFTA) en vigeur, an additional Renminbi Clearing Centre operating in Africa will most likely further boost bilateral trade between Africa and China when dealing in international settlement without the need to use an intermediate currency.
On a trade perspective, following the ratification of the MCFTA, statistical data points out that Mauritius' exports to China increased by 148 percent in 2021, it is estimated that Mauritius' exports to China is to further increase by 3 percent during year 2022, a year-on-year increase. With the launch of the Mauritius Renminbi Clearing Centre, Mauritian local exporters as well as importers would be able to deal with Chinese suppliers directly in Renminbi, creating an ease of payment and effectively reducing transaction costs. The possibility to start trading directly in Renminbi between Mauritian and Chinese traders is set to boost trade effectiveness and possibly augment trade relations during year 2023 and forthcoming years.
On an investment perspective, as per recent statistics from the Ministry of Commerce of China, the flow of China's direct investment in Mauritius for 2021 amounted to an approximate $238.56 million, and the stock of China's direct investment in Mauritius for same year amounted to an approximate $1.059 billion.
Similarly, following the ratification of the MCFTA, on January 1, 2021, the Bank of China (Mauritius) Co. Ltd. completed international settlement business of $2.504 billion, a milestone since its opening on September 27, 2016.
According to Chinese Statistics, from January to October 2022, the Bank of China (Mauritius) Co., Ltd, international settlement business volume has reached an approximate $2.491 billion, with a year-on-year growth of 22.47 percent. On the other hand, from January to September 2022, the Bank of China (Mauritius) Co., Ltd. cross-border RMB payment and clearing business volume reached 779 million yuan, a new height in RMB transactions in Mauritius. International settlement business volume is expected to reach $3 billion by end of 2022. The recently launched Renminbi Clearing Centre is expected to possibly double Renmibi transactions volume mediated through Mauritius in 2023.
The pandemic created widespread economic crisis and the need for tangible investment into the African continent is being intensified in order to attain economic recovery. According to the World Bank, a faster recovery in the aftermath of the pandemic requires boosting investments and ensuring the establishment of a pipeline of well-defined projects which contribute to the growth and social cohesion. Mauritius has always been part of regional initiatives within the African continent, and its financial infrastructure is at the heart of a web of payment systems that will now facilitate cross border flows in Renminbi.
Thus, Mauritius position as the International Financial Center in the African region combined with its DTAAs, payment infrastructure, MCFTA and the recent Mauritius Renminbi Settlement Center is a step toward consolidating and diversifying the financial services offered by streamlining Renminbi cross-border transaction for the betterment of African and Chinese people.
The author is the Economic & Commercial Counsellor of Mauritius in China and the China Chief Representative of the Mauritius Economic Development Board Representative Office in China.
The views don't necessarily reflect those of China Daily.
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