CHINA’s renminbi will become increasingly important in global trade, and on the African continent, Standard Bank joint CE Sim Tshabalala has said.
He told a panel discussion hosted by the bank ahead of a Brics summit in Durban that the renminbi had started to play a role in trade flows between China and Africa.
This is significant as Sino-African trade is normally denominated in dollars and bypassing the US currency would reduce the cost of doing business for both Chinese and African companies.
Africa is China’s fastest-growing trade partner, with trade surpassing an estimated $200bn last year, up from $166bn in 2011.
"I think an increasing number of trade transactions are being denominated in renminbi," Mr Tshabalala told BDlive in an interview after the panel discussion.
"Some central banks are also thinking about denominating some of their reserves in renminbi so they are buying renminbi instruments."
Trade agreements between the countries in the Brics group — Brazil, Russia, India, China and South Africa — have also traditionally been denominated in dollars as their currencies are not convertible.
Standard Bank group economist Goolam Ballim said the bank had introduced the renminbi into its "suite of products" three years ago.
"We are already doing a plethora of renminbi deals, for a variety of very ordinary trade in goods and — machinery, capital equipment, and even some basic goods like electricity products and clothes," he said.
Mr Tshabalala said the role of the dollar as the world’s main reserve currency would not be usurped by the renminbi, even though China has overtaken the US as the world’s top trading nation.