Canadian Manufacturing

EDC signs Renminbi deal with Chinese bank

by Canadian Staff   

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The move could save exporters $2.8 billion over ten years because trade deals can be settled in Chinese currency without first being converted to U.S. dollars

OTTAWA—Export Development Canada (EDC) is partnering with the Industrial and Commercial Bank of China (Canada)(ICBK) to promote the use of Renminbi (RMB) as a currency of settlement in trade-related transactions.

The agreement comes at the same time that Canada’s RMB trading hub, the first in the American continents, is being launched.

The two trade-focused financial institutions, which signed a memorandum of understanding March 23, will look to facilitate transactions in RMB where it makes the most sense for all parties.

“As the second largest trading partner, export destination and source of imports for Canada, China contributes enormously to Canada’s GDP. According to Swift, (the Renminbi) is now the fifth most-used currency for international payments,” said Mingxuan Zhu, president and CEO for ICBK. “Our bank group is a leader and pioneer in the RMB market, and ICBK is pleased to work with EDC for (the Renminbi’s) internationalization.”


Currently, doing business in Renminbi can be time consuming and costly for Canadian companies, and, accordingly, hedging against currency risk is very challenging.

Canadian banks currently settle trade payments through foreign subsidiaries with RMB hubs, usually Singapore on the eastern hemisphere and London on the western side.

In order to do so, they must often first convert from Canadian dollars into U.S. dollars before closing in Renminbi, adding costs to clients.

“At its core, the relationship with ICBK is about laying the groundwork to help make it easier for Canadian companies with business interests in China to manage their currency exchanges and their Chinese market financing,” said Mairead Lavery, senior vice-president of business development at EDC. “ICBK and EDC will be looking at ways to make the transactional aspect of Canadian and Chinese trade a little less cumbersome.”

A recent report by the Canadian Chamber of Commerce calculated that establishing an RMB hub could boost Canadian exports to China by as much as $32-billion and save importers $2.8-billion in transactions over 10 years.

The chamber report identified forestry, agriculture, mining and aerospace as the export sectors most likely to benefit from dealing directly in RMB.

Two-way trade between Canada and China amounted to 77 billion in 2014.


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