Page 324 - 2023 White Paper on the Business Environment in China
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3 White Paper on the Business Environment in China
however; the e-CNY is simply the money in those for now, however, that China will continue to push
wallets, as China’s legal tender issued by China’s its lead in the global CBDC race, and central banks
central bank. It is worth stressing that merely being the world over will try not to fall too behind (Luo).
digital is transformative, but not revolutionary
without State strategic plans such as the Belt and Banking
Road Initiative (BRI). China’s digital yuan will be
beneficial in many different ways, but one of the China's commercial banks are expected to see
areas where it can bring more value is in promoting profits rise 8% year-on-year in the third quarter
the use of the yuan for cross-border payments, of 2022, according to a report issued Tuesday
thereby converting some of the US dollar- by the Bank of China Research Institute. From
denominated international trade transactions into April to June, banks increased support to the
renminbi-denominated ones, and challenging the real economy and ushered in more business
dominance of the US dollar in international trade opportunities. Non-interest incomes will become
and finance. This will not happen overnight, but if a driver of commercial banks' profits in the third
there is enough penetration and acceptance of the quarter, and lenders will develop intermediary
digital RMB in a separate jurisdiction or region, it is businesses including investment banking and
conceivable that a trade and finance system parallel wealth management. Banks will also leverage
to the US dollar system can gain critical mass — a financial technology to keep costs down and
system that can allow certain countries to bypass improve profitability. From July to September,
the global banking system and US sanctions. The commercial banks' non-performing loan ratio
BRI is currently a key initiative for China and, was likely to keep falling, while their outstanding
consequently, it is easy to imagine how important non-performing loans may rise moderately, the
the expansion of the digital RMB could become for report said, while calling for continuous attention
China within the BRI. According to the official outline, on risks in key industries and small and medium-
the BRI is a global initiative with pathways along sized banks (Xinhua, China’s Commercial Banks’).
the historic Silk Road, which puts a major focus on
countries in Asia, Eastern Africa, Eastern Europe, The overall operations of China's small and
and the Middle East, a region mainly composed of medium-sized banks are stable and their risks are
emerging markets. Both the BRI and the RCEP will generally controllable. The country's small and
undoubtedly be two big markets for China’s digital medium-sized banks handled non-performing
yuan. While facilitating cross-border adoption of loans worth 594.5 billion RMB (about US$87.8
the digital yuan, such economic exchanges will also billion) in the first half of 2022, up 118.4 billion
help with the implementation of other central bank RMB over the same period in 2021. As the most
digital currencies in Asia (Caudevilla). vibrant community in the banking sector, small
and medium-sized banks have total assets of
According to the Atlantic Council, 105 countries, 96 trillion RMB, accounting for about 29% of the
representing over 95% of global GDP, are exploring banking sector's total. The banking regulator has
a CBDC. For that significant representation, we moved to reduce the financial risks of small and
have China to thank. In the same way China has medium-sized banks since the beginning of the
done with 5G technology, they can be a major year. The non-performing loans ratio of China's
exporter of CBDC infrastructure. More ominously, commercial banks stood at 1.67% at the end of
rogue nations can use non-Western CBDC to evade June, down 0.06 percentage points from the
sanctions like the ones the US and European Union beginning of 2022 (Xinhua, China’s Small).
imposed on Russia after its invasion of Ukraine.
CBDCs are absolutely being seen as a form of The Export-Import Bank of China (China
statecraft by countries that have been subjected EximBank) offered 1.25 trillion RMB (US$178.78
to Western sanctions in the past and wish to billion) in loans to the foreign trade industry in
have a way to avoid that in the future. In such an the first eight months of 2022, up 26.03% year-on-
atmosphere, determining who to credit for China’s year. By the end of August, the bank's outstanding
CBDC development can be difficult because of the loans to the foreign trade sector rose 18.23 percent
nation’s famously opaque government. It appears
324
however; the e-CNY is simply the money in those for now, however, that China will continue to push
wallets, as China’s legal tender issued by China’s its lead in the global CBDC race, and central banks
central bank. It is worth stressing that merely being the world over will try not to fall too behind (Luo).
digital is transformative, but not revolutionary
without State strategic plans such as the Belt and Banking
Road Initiative (BRI). China’s digital yuan will be
beneficial in many different ways, but one of the China's commercial banks are expected to see
areas where it can bring more value is in promoting profits rise 8% year-on-year in the third quarter
the use of the yuan for cross-border payments, of 2022, according to a report issued Tuesday
thereby converting some of the US dollar- by the Bank of China Research Institute. From
denominated international trade transactions into April to June, banks increased support to the
renminbi-denominated ones, and challenging the real economy and ushered in more business
dominance of the US dollar in international trade opportunities. Non-interest incomes will become
and finance. This will not happen overnight, but if a driver of commercial banks' profits in the third
there is enough penetration and acceptance of the quarter, and lenders will develop intermediary
digital RMB in a separate jurisdiction or region, it is businesses including investment banking and
conceivable that a trade and finance system parallel wealth management. Banks will also leverage
to the US dollar system can gain critical mass — a financial technology to keep costs down and
system that can allow certain countries to bypass improve profitability. From July to September,
the global banking system and US sanctions. The commercial banks' non-performing loan ratio
BRI is currently a key initiative for China and, was likely to keep falling, while their outstanding
consequently, it is easy to imagine how important non-performing loans may rise moderately, the
the expansion of the digital RMB could become for report said, while calling for continuous attention
China within the BRI. According to the official outline, on risks in key industries and small and medium-
the BRI is a global initiative with pathways along sized banks (Xinhua, China’s Commercial Banks’).
the historic Silk Road, which puts a major focus on
countries in Asia, Eastern Africa, Eastern Europe, The overall operations of China's small and
and the Middle East, a region mainly composed of medium-sized banks are stable and their risks are
emerging markets. Both the BRI and the RCEP will generally controllable. The country's small and
undoubtedly be two big markets for China’s digital medium-sized banks handled non-performing
yuan. While facilitating cross-border adoption of loans worth 594.5 billion RMB (about US$87.8
the digital yuan, such economic exchanges will also billion) in the first half of 2022, up 118.4 billion
help with the implementation of other central bank RMB over the same period in 2021. As the most
digital currencies in Asia (Caudevilla). vibrant community in the banking sector, small
and medium-sized banks have total assets of
According to the Atlantic Council, 105 countries, 96 trillion RMB, accounting for about 29% of the
representing over 95% of global GDP, are exploring banking sector's total. The banking regulator has
a CBDC. For that significant representation, we moved to reduce the financial risks of small and
have China to thank. In the same way China has medium-sized banks since the beginning of the
done with 5G technology, they can be a major year. The non-performing loans ratio of China's
exporter of CBDC infrastructure. More ominously, commercial banks stood at 1.67% at the end of
rogue nations can use non-Western CBDC to evade June, down 0.06 percentage points from the
sanctions like the ones the US and European Union beginning of 2022 (Xinhua, China’s Small).
imposed on Russia after its invasion of Ukraine.
CBDCs are absolutely being seen as a form of The Export-Import Bank of China (China
statecraft by countries that have been subjected EximBank) offered 1.25 trillion RMB (US$178.78
to Western sanctions in the past and wish to billion) in loans to the foreign trade industry in
have a way to avoid that in the future. In such an the first eight months of 2022, up 26.03% year-on-
atmosphere, determining who to credit for China’s year. By the end of August, the bank's outstanding
CBDC development can be difficult because of the loans to the foreign trade sector rose 18.23 percent
nation’s famously opaque government. It appears
324
