Four China-Indonesia Financial Cooperation Pacts Land: Local Currency Settlement + CIPS + RMB Clearing Optimize Cross-border Trade Payments

China and Indonesia have agreed on four financial cooperation initiatives, establishing mechanisms for RMB clearing, local currency direct trading, cross-border QR code payment, and CIPS system access, helping China-Indonesia foreign trade enterprises simplify cross-border fund receipt and payment procedures, reduce USD exchange losses, and effectively hedge operational risks from exchange rate fluctuations.

Recently, the People's Bank of China and Bank Indonesia held a bilateral governor joint working meeting, signing multiple financial cooperation memoranda. Four major cooperation outcomes were officially landed, covering large-scale international trade settlement, cross-border investment and financing settlement, and small-scale cross-border trade receipts and payments, comprehensively improving the local currency cross-border settlement infrastructure between China and Indonesia, helping foreign trade enterprises of both countries reduce heavy reliance on USD settlement, effectively avoiding profit erosion risks from drastic USD exchange rate fluctuations, and continuously releasing RCEP regional economic and trade development dividends.

The four core financial cooperation contents landed this time include: first, officially designating Bank of China Jakarta Branch as the regional RMB clearing bank for Indonesia, building a standardized and efficient offshore RMB cross-border clearing channel, providing stable local currency clearing services for bilateral large-scale trade and project investment and financing; second, expanding the scope of China-Indonesia local currency direct trading (LCT) cooperation, increasing the scale of direct exchange between RMB and Indonesian rupiah, covering more foreign trade industries and small and medium import-export enterprises; third, the China-Indonesia cross-border QR code payment interconnection system officially commercialized, open for real-time local currency QR code receipt and payment services for cross-border trade, cross-border business travel, offline foreign trade merchants, significantly reducing small cross-border transaction fees; fourth, Indonesia's leading commercial banks formally connected to the CIPS RMB cross-border payment system, bypassing US dollar intermediary banks through independent clearing channels, shortening cross-border fund settlement cycles, reducing middleman transaction fees and fund freezing risks.

 

Previously, most enterprises engaged in China-Indonesia import and export trade could only choose USD as the intermediate settlement currency. A single cross-border receipt and payment often required two currency conversions, incurring substantial bank conversion fees. Fed monetary policy adjustments causing significant USD exchange rate fluctuations often sharply eroded the already thin order profits of foreign trade enterprises. Meanwhile, the multi-intermediary bank layered transfer model led to cross-border remittances typically taking 3-7 working days, lengthening corporate capital turnover cycles. Small and medium foreign trade factories, bulk commodity traders, and cross-border logistics forwarders have long faced multiple operational challenges such as slow payment, exchange losses, and fund compliance management.

Currently, bilateral trade between China and Indonesia continues to rise, with annual import and export trade volume exceeding $100 billion. Indonesia exports large quantities of bulk commodities such as coal, nickel ore, palm oil, and natural rubber to China, while China sells photovoltaic modules, new energy vehicles, machinery and equipment, textile home furnishings, electronic accessories, etc., to the Indonesian market. Relying on the new local currency cross-border settlement system, foreign trade enterprises can directly use RMB or Indonesian rupiah for trade payments, eliminating the cost of two conversions. Data shows that the total comprehensive cost per cross-border settlement for enterprises can drop by more than 30%, with funds potentially arriving on the same day. At the same time, relying on the clearing bank and CIPS system, commercial banks can also provide a diversified range of international trade financial products such as letters of credit, import and export bills, order financing, and cross-border guarantees, alleviating capital pressure for enterprises in preparing goods, building overseas factories, and investing in industrial parks.

The landing of this financial interconnection will also serve as a demonstration sample for ASEAN regional local currency settlement development. As the China-Indonesia local currency settlement model matures, major ASEAN economies such as Malaysia, Thailand, Vietnam, and the Philippines are expected to accelerate regional local currency trading and settlement cooperation, gradually reducing regional cross-border trade dependence on the USD payment system. For enterprises deeply involved in the Indonesian market, switching to local currency settlement mode as early as possible can not only lock in order profits and hedge exchange rate fluctuation risks but also better adapt to various foreign exchange regulatory policies of different countries, avoiding compliance risks in cross-border fund declaration and foreign exchange verification.

Industry financial analysts said that the landing of these four financial cooperation initiatives marks a key step in building Indonesia's offshore RMB ecosystem. In the future, bilateral green infrastructure investment, cross-border industrial park cooperation, and long-term bulk commodity trade will all rely on the local currency settlement system to obtain more convenient and lower-cost financial support, continuously optimizing the regional business environment and helping China-Indonesia bilateral economic and trade cooperation develop towards higher quality, safer, and more stable directions.