Yuan clearing bank in sight in Thailand

Premier Li Keqiang and Thai Prime Minister Yingluck Shinawatra chat during their meeting at Government House in Bangkok on Friday. Damir Sagolj / Reuters

Move in Thailand will help boost trade settlement in the currency: Li

China is considering setting up a yuan clearing bank in Thailand to meet demand for currency settlement between the two countries, Premier Li Keqiang said on Friday. [Special coverage]

The move is to encourage more trade settlement in the yuan between businesses from the two nations, Li said during a speech to the Thai parliament.

The bank will help meet the target of annual bilateral trade of $100 billion between China and Thailand in 2015, a goal mentioned by Li and his Thai counterpart Yingluck Shinawatra during a news conference after their official meeting.

Yang Baoyun, a professor of Southeast Asian studies at Peking University, said the new clearance bank and a currency swap deal would free businesses and entrepreneurs from the trouble of currency exchanges.

Bilateral trade has prospered, with the volume reaching nearly $70 billion last year.

China is now Thailand's largest trading partner, while Thailand is China's second-largest trading partner in the 10-member Association of Southeast Asian Nations.

It is time for the two sides to quickly draw up measures to achieve an early start, Yang said.

A yuan clearing bank in Thailand would be in line with increasing circulation of the Chinese currency in Southeast Asian nations.

The volume of bilateral swap agreements between China and ASEAN has reached 1.4 trillion yuan ($228 billion). while yuan-denominated cross-border settlements reached 1.12 trillion yuan by June this year.

The figures come from Yi Gang, deputy governor of the People's Bank of China and head of the State Administration of Foreign Exchange.

Jin Canrong, an international affairs professor at Renmin University of China, said the program announced on Friday serves as part of China's financial diplomacy, a recent highlight of the nation's foreign policies.

This financial progress is making China's development a driving force to benefit neighbors, and "will further boost connectivity-building and economic integration in the region", Jin said.

China and Thailand also reached a consensus on Friday on the signing of a Memorandum of Understanding on visa exemption for regular travelers between the two nations, Li and Yingluck told reporters.

Visa exemption would facilitate people-to-people and cultural exchanges between the two countries and bring more benefits to their people, Li said.

"There is an old Chinese saying that goes: The more exchanges among relatives, the warmer their relations become," Li added.

Thailand is the first ASEAN country to start such talks with China.

Yang, of Peking University, said Chinese tourists have become big spenders in Thailand and the visa exemption will set a good example for similar negotiations with other ASEAN members.

Li estimated that the number of Chinese tourists to Thailand this year will reach 5 million.

In his speech to parliament, Li said the Chinese movie Lost in Thailand — a conventional comedy about two rival Chinese businessmen and a simple-minded pancake maker — topped the Chinese box office, has been dubbed into Thai and aired in Thailand.

"I am not advertising for the film. I am advertising for the friendship and exchanges between China and Thailand," he said.

Bullet train technology, the power sector and renewable energy projects were also highlighted for cooperation during Li's speech.

He said China will encourage its companies to import 1 million tons of rice from Thailand over the next five years, among other measures, to boost imports of products such as rubber and cassava.