China's ICBC Doha clears more than $86 bln in yuan transactions

Nawied Jabarkhyl

DUBAI, April 26 (Reuters) - Industrial and Commercial Bank

of China has cleared more than 590 billion yuan ($86

billion) in transactions in Qatar in the nearly two years since

it opened its clearing centre in the Gulf state, an executive

told Reuters.

The move reflects a surge in trade and investment between

China and Gulf Arab states in recent years, though most business

between the two sides is still conducted in U.S. dollars.

The clearing centre was launched in June 2015 as the Middle

East's first location for clearing transactions in the yuan to

promote business ties. A clearing centre can handle all parts of

a currency transaction from when a commitment is made until it

is settled, reducing costs and time taken for trading.

"ICBC Doha opens the door to China's onshore RMB (yuan) and

foreign exchange markets to local financial institutions,

corporates and investors," Zheng Chunyi, General Manager of ICBC

Doha, said in an interview. "Our data shows that Qatar, the

United Arab Emirates and Kuwait are the most active Middle East

countries using the RMB clearing centre for direct payments with

Chinese mainland and Hong Kong."

Chunyi said trade between Gulf Cooperation Council countries

and China had surged more than 600 percent in the past decade,

with Chinese investment in the Middle East reaching more than

$160 billion between 2005 and 2016.

The yuan has established itself as the most active currency

used by the UAE and Qatar for direct payments with the Chinese

mainland and Hong Kong, according to SWIFT data.

But most trade between the region and China is still

denominated in dollars and China's payments for its oil imports

from the region are believed to be denominated in dollars, the

main currency used in global oil trade.

"As the trade volume between China and the region continues

to grow in a rapid pace, we are looking forward to seeing more

and more usage of RMB in the region," said Chunyi.

In a further move to boost commerce between the two sides,

Agricultural Bank of China (AgBank) was last year given

permission by China's central bank to clear yuan transactions in

the UAE.

($1 = 6.8911 Chinese yuan renminbi)

(Writing by Tom Arnold; Editing by Mark Potter)