Agricultural Bank of China (ABC), the third biggest lender in China in relation to assets, opened on Wednesday a Chinese currency RMB, or the yuan, clearing branch in the United Arab Emirates (UAE).
The Dubai branch is ABC's first yuan clearing bank and its second branch in the Middle East after another branch in the Dubai International Financial Center (DIFC), the biggest financial free zone in the region.
ABC said in a media statement at the opening ceremony that the new branch is to improve ABC's global settlement business, contribute to internationalization of yuan, and support the Belt and Road Initiative.
Its Dubai Branch will provide diversified banking services including yuan settlement, trade finance, syndicated loans and foreign exchange transactions.
At the opening ceremony, Zhao Huan, President of ABC, said that the branch "operating on a strictly compliant basis, would actively participate in the development of an offshore RMB market in UAE, and promote the use of RMB in China-UAE trade, investment, payment, settlement and market transactions, to support the fast-developing bilateral financial cooperation."
The Gulf Arab state UAE, a major oil supplier, is one of China's most important trading partners. Since the establishment of diplomatic relations over 30 years ago, China-UAE bilateral trade has grown from 63 million U.S. dollars in 1984 to 54.8 billion dollars in 2014 and is estimated to reach 60 billion dollars by the end of 2016, according to UAE official data.
More than 4,000 Chinese firms operate in the UAE where over 300,000 Chinese citizens reside in. Earlier last month, Dubai Tourism said among Dubai's top 20 source markets for inbound tourism, China continued to top the growth rate with a 64-percent increase over the first quarter in 2016, delivering 230,000 tourists.
ABC's move is based on agreement to set up a RMB settlement hub that was signed while Abu Dhabi Crown Prince Sheikh Mohamed bin Zayed Al-Nahyan was in China for an official visit in December 2015.