DBS China CEO Ginger Cheng: A new window for RMB internationalization has opened

by Liu Chenguang

In recent years, China's financial sector has seen a significant increase in openness, gradually lifting restrictions on foreign ownership in banking, securities, and insurance.

The Governor of the People's Bank of China, PAN Gongsheng, has emphasized a focus on high-quality development, enhancing monetary policy and macro-prudential controls to create a favorable environment for economic stability and structural adjustments.

As the Chinese economy continues to grow steadily, foreign financial institutions are playing a crucial role in injecting vitality and competitiveness into the market, aiding its integration into the global financial system.

Ginger Cheng, CEO of DBS Bank (China), reflects on the bank's 30-year journey in China and identifies artificial intelligence as a key paradigm shift in the financial industry. She also underscores the importance of establishing a comprehensive regulatory framework for green finance to support sustainable development as Shanghai advances its status as an international financial center.

Jiemian News: When did your institution enter China, and are there any memorable events during its development?

Cheng: DBS Bank entered the mainland Chinese market in 1993. In 2007, DBS Bank (China) Ltd. began operations in Shanghai, becoming one of the first foreign legal banks registered in China and the first foreign bank from Singapore.

Shanghai serves as the gateway to China's financial opening. Over the years, DBS Bank has greatly benefited from Shanghai's financial openness, achieving several industry-leading accomplishments. We were the first foreign bank to establish a branch in the Shanghai Free Trade Zone and the first to underwrite local government bonds. In 2018, DBS became one of the first banks designated as a margin custodian for the Shanghai International Energy Trading Center, currently holding a market share of 20 percent to 25 percent. Our development in Shanghai reflects the broader narrative of China's openness.

DBS Bank has consistently committed to expanding its business in China. Recently, our group has sought to raise the stake of DBS Securities, registered in Shanghai, from 51 percent to 91 percent, pending regulatory approval. Looking ahead, we will continue to view China as a key growth market, confident in its potential.

Jiemian News: As a multinational financial institution, what opportunities has DBS Bank gained from China's ongoing financial opening, and what are its strategic plans in China?

Cheng: With over 30 years in China, DBS Bank has been both a participant in and beneficiary of the opening of the Chinese financial market, expanding our business in a prudent manner. Particularly in the last decade, we have seen the financial market opening become increasingly expansive, and DBS Bank is proud to be a part of this journey.

We have seized opportunities to support Chinese enterprises' international expansion, promote renminbi internationalization, and advance green finance and wealth management.

A major focus of ours is supporting Chinese companies going global, which has proven to be an effective strategy. In recent years, Southeast Asia has emerged as a hotspot for overseas investments from mainland Chinese enterprises. For example, in 2023, China became Indonesia's second-largest foreign investor. This May, we hosted the "China-Indonesia 2024 Executive Forum," connecting over 130 Chinese entrepreneurs with local businesses and governments in Indonesia.

There is a new window for renminbi internationalization now. We expect a significant increase in renminbi clearing volumes in 2024. The renminbi has served as a stabilizing force in the global economy. As geopolitical dynamics evolve, we anticipate its use will expand, potentially becoming the third-largest settlement currency.

DBS Bank is one of the first banks to directly participate in the Cross-Border Interbank Payment System (CIPS), enhancing cross-border payment services in renminbi for foreign trade enterprises. Our presence in the panda bond market has been strong, having issued 16.5 billion yuan in panda bonds in 2023, capturing over 10 percent of the market.

In the realm of green finance, we became the first Southeast Asian bank included in the People’s Bank of China’s carbon reduction support tools, successfully issuing our first carbon reduction support loan.

Jiemian News: With the increasing concentration of foreign asset management institutions, what new opportunities and challenges do foreign financial institutions face as China continues to open its financial markets?

Cheng: This year, "new quality productive forces" have emerged as a hot topic, being highlighted in the government work report as a top priority for 2024. The recent discussions at the 20th Central Committee's Third Plenary Session focused on advancing emerging strategic industries, which are crucial for driving innovation-driven growth in China.

These reforms present great opportunities for foreign financial institutions. At DBS China, we have established a dedicated team to service the new economy, offering comprehensive financial services to tech companies at various stages of development.

Many tech companies are increasingly looking overseas for growth and market share, with Southeast Asia becoming a competitive destination for these firms.

With the ongoing stabilization of the Chinese economy and the flourishing offshore markets, we foresee a rising demand for the renminbi in international trade and finance, a trend that foreign financial institutions like ours will help facilitate.

Jiemian News: What potential does Shanghai have in becoming an international financial center?

Cheng: I believe Shanghai is a central node in China's circular economy and serves as a vital portal for international engagement. The Shanghai government has laid a strong foundation with its "14th Five-Year Plan" to develop a globally influential tech innovation center, integrating new technologies like AI, big data, and blockchain into financial services.

One of the most significant paradigm shifts in finance is the rise of artificial intelligence. Shanghai has established a vibrant AI ecosystem, attracting high-level talent from various sectors. This positioning allows Shanghai to leverage existing technology and policies to further enhance its capabilities in AI, contributing significantly to global AI development.

Shanghai still has considerable room to grow as it advances toward becoming an international financial center. DBS aims to align its strengths with Shanghai's focus areas, enhancing collaboration to support the city’s "Five Centers" development.

Jiemian News: How can Shanghai leverage its advantages to accelerate capital accumulation and improve global financial resource allocation?

Cheng: I'd like to emphasize green finance. Shanghai's initiatives and achievements in promoting green transformation have been widely recognized. As a hub for industrial activity and financial services, Shanghai is well-positioned to lead the global green transition.

DBS has participated in green finance cooperation between China and Singapore, pushing for innovation in green financial products.

From our experience, establishing a unified and comprehensive regulatory framework for green finance is crucial. Regulatory bodies have introduced guidelines that promote standardized classifications and attract more investments. By collaborating with regional centers like Singapore, Shanghai can optimize carbon credit solutions and utilize mixed financing to support key decarbonization projects.

Meanwhile, fostering information exchange between academic institutions and sustainability experts will enhance transparency and ensure the effective communication of ESG data within the financial sector.