China to set up yuan clearing bank in Thailand

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China will consider the establishment of a yuan clearing bank in Thailand to meet demand for cross-border yuan trade settlement by Chinese and Thai companies, said Premier Li Keqiang during a speech to the Thai parliament on Friday.

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.

Bilateral trade between China and Thailand has prospered in recent years, 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.

A yuan clearing bank in Thailand would also serve the goal of increasing circulation of 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.