Optimization measures for Swap Connect promotes RMB internationalization: expert

The newly announced measures to optimize the mutual access between the mainland and Hong Kong interest rate swap markets, also known as Swap Connect, will further unleash the potential of overseas investors in investing in mainland capital market and promote the internationalization of the renminbi, expert said.

China's central bank, the Hong Kong Securities and Futures Commission, and the Hong Kong Monetary Authority announced a series of measures on Monday to optimize the Swap Connect, aiming to better meet the diversified risk management needs of domestic and foreign investors and reduce participation costs.

These measures, including the addition of standardized interest rate swap contracts with the International Monetary Market (IMM) settlement dates as payment periods, the introduction of contract compression services, the optimization of related system functions, and an extension of the fee discount period.

Lu Xiangqian, general manager of the Second Department of Marketing of the China Foreign Exchange Trade System, highlighted the positive impact and potential benefits of the optimization measures.

"The launch of these optimization measures for Swap Connect signifies another milestone in the construction of the mutual access mechanism between the Hong Kong and mainland markets. It will provide international investors with more accurate and efficient tools for Renminbi interest rate risk hedging and duration management, further enhancing the competitiveness of Swap Connect in the international derivatives market," said Lu.

Launched on May 15, 2023, the Swap Connect is a mechanism designed for overseas investors who purchase various Renminbi assets, including bonds, through channels such as Bond Connect to manage interest rate risks.

The Swap Connect resolves the inconveniences and high costs that overseas investors previously faced when managing Renminbi interest rate risks. It helps attract more international investors to participate in the Chinese bond market and further strengthens their confidence in holding Renminbi assets, including bonds.

"The Swap Connect will synergize with mechanisms such as Bond Connect to further unleash the potential of overseas investors in investing in the mainland capital market. This will contribute to deepening and broadening the opening of the country's financial market and promoting the internationalization of the Renminbi," said Lu.

Optimization measures for Swap Connect promotes RMB internationalization: expert

On his second official visit to China, Prime Minister of the Republic of Vanuatu Charlot Salwai expressed admiration for China's remarkable ability to balance preserving its cultural heritage with embracing innovative transformation.

Salwai paid an official visit to China from July 7 to 12. During his trip, he toured the southern province of Guangdong and explored the megacities of Beijing and Shanghai. His visit included tours of high-tech companies, a ride on a high-speed train, and a performance of traditional Cantonese opera.

In an interview with China Central Television Network (CCTV) aired on Friday, Salwai recounted his journey starting with a warm welcome that included enjoying Beijing Roast Duck, also known as Peking Duck -- a culinary delight introduced to him by the Chinese ambassador in Vanuatu.

"Many had to say. Peking Duck. Because we had it here on our arrival, so it was very tasty. And I understand that the Chinese ambassador in Vanuatu brought us to one of the traditional restaurants, small but beautiful," he said. The prime minister sees China's preservation of its culture as a vital lesson in understanding one's roots and the journey to the present day, acknowledging China's efforts to integrate cultural preservation with modernization.

"It's going to be my second official visit to China. I'm always impressed to see big changes and especially innovations made by China and especially the cities. Because a big impression is to see how China continues to maintain and keep its culture. Because I think it's the basis of everything -- to know where you come from and to understand where we are today. I feel that China is doing a lot to maintain its culture, but at the same time, doing, innovating to transform its culture,” Salwai said.

He also emphasized the importance of learning from China's sustainable development strategies.

"Today, it comes from a long way, some hardship, the government, and also the people of China. So, I'm impressed to see what is done, especially how China associates infrastructure development with nature. That's meant to keep, continue to keep the environment. It takes effort with the climate change by maintaining the ecosystem. I think it's something that, for a small country like Vanuatu, is important to learn. So, we are here. I'm here with my delegation to learn," Salwai said.

Vanuatu's PM commends China's cultural preservation, innovation amid fast growth