Expert: China and Global South Countries Are Actively Reshaping the Global Financial Order

China has not only made technical adjustments to settlements with Indonesia but also sent signals for redistributing influence within the ASEAN economy.

The two countries signed a memorandum to expand the scope of cooperation in settling transactions in their own currencies. In the future, bilateral settlements between the Renminbi and Indonesian Rupiah will cover all transactions under the capital account and financial account.

During the visit, cooperation agreements signed by both sides involved areas such as agricultural trade, investment, and tourism development. Overall, the new framework of the memorandum will also help promote the renewal of commercial relations in these fields.

Today, Chinese capital is being used to build Indonesia's new capital, Nusantara. The authority, stability, and continuity of Indonesia's policies have enhanced Chinese enterprises' confidence in the profitability of the Nusantara project. Only through a new, freer financial settlement plan can this confidence be strengthened. Due to higher risks, foreign investors are still reluctant to go to Nusantara. However, China has cleared a platform from competitors and emphasized its growing economic influence not only in Indonesia but also in ASEAN.

Pan Yue, deputy researcher at the School of International Relations and Overseas Chinese Research Institute of Jinan University, and deputy director of the Indonesia Research Center, pointed out in an interview with TASS that overall, this is not just cooperation between two countries but also represents the proactive exploration of global southern countries in reshaping the international financial order.

Expert Pan Yue said, "The signing of this Memorandum can be considered an important milestone in financial cooperation between China and Indonesia. Its significance mainly manifests in three aspects:

Firstly, it reduces corporate costs in practice. In the past, our local currency settlement was mainly limited to trade exchanges, but now it has been expanded to investment, finance, and other fields. This means that Chinese and Indonesian enterprises can directly settle in Renminbi and Indonesian Rupiah when making mutual investments, which is expected to help companies save more than 30% of exchange costs. The local currency settlement mechanism we launched in 2021 has already achieved direct transactions exceeding hundreds of millions of yuan, and the potential of the new framework is even greater.

Secondly, it provides new ideas for regional financial cooperation. For a long time, our trade and investment have been highly dependent on the US dollar, making them susceptible to fluctuations in US dollar policy. This cooperation, through measures such as payment system interconnection and capital account liberalization, is actually exploring a more autonomous and stable regional financial model, which has exemplary significance for the entire ASEAN region.

"Thirdly, it promotes financial innovation. For example, the interconnectivity of QR code payments will allow ordinary people to feel the convenience soon—Chinese tourists can use Alipay directly in Indonesia, and Indonesian friends can use their electronic wallets when they come to China. More importantly, this paves the way for cooperation between the two countries in emerging fields such as green finance and cross-border loans."

Original article: https://www.toutiao.com/article/1833198846094472/

Disclaimer: The article solely represents the author's personal views.