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According to the research of Guangxi Zhuang Autonomous Region Branch of the People's Bank of China and Guangxi Finance Society, as China has become Malaysia's largest trading partner for 15 consecutive years, the scale and scope of the use of RMB in Malaysia has continued to expand, and five factors have promoted the continuous release of the potential of the use of RMB in Malaysia.

First, economic and trade exchanges have grown rapidly. China has been Malaysia's largest trading partner for 15 consecutive years. The bilateral trade volume between China and Malaysia in 2023 is 45.84 billion ringgit, accounting for 17.1% of Malaysia's total trade volume. China is Malaysia's largest source of imports, accounting for 21.3% of total imports. The RMB has great potential to play a role in economic and trade cooperation between the two countries.

Second, China and Malaysia continue to launch mutually beneficial bilateral cross-border financial cooperation policies. In 2021, the Central Bank of Malaysia and the People's Bank of China extended the currency swap arrangement agreement, which will continue to strengthen the cooperation between the two central banks, stabilize market confidence, avoid exchange rate risks, and maintain stability in the regional financial market.

In the past 10 years, the Chinese government has introduced a series of cross-border RMB policies to encourage the cross-border use of RMB. Improve the construction of financial infrastructure, constantly build RMB clearing channels, and set up RMB clearing banks in Malaysia; The central banks of the two countries have been promoting bilateral currency swaps to provide liquidity support to the financial systems of the two countries. The two countries signed the framework of regional cooperation agreement, RCEP has officially come into effect in Malaysia, and the gradual implementation of the policy will bring more cross-border RMB use scenarios and needs to Malaysia.

Third, China's "double cycle" and "construction of a super-large market system" have "radiation effects". As the world's second largest economy, China's economic fundamentals are stable and sound. More and more investors are paying more attention to China's capital market and RMB investment, hoping to share the dividend of China's rapid economic growth by increasing investment in RMB and related products in the Chinese market. Overseas investors have increased their holdings of RMB assets through diversified RMB investment and financing methods, effectively improving the acceptance of and confidence in RMB in overseas markets, and successfully promoting the internationalization of RMB in offshore and individual markets.

Fourth, market opportunities. The increasingly abundant RMB products and investment and financing channels have improved the autonomy and consciousness of market participants in the use of RMB. In recent years, the channels for foreign investors to participate in China's domestic market and RMB investment and financing have become increasingly abundant. RMB cross-border trade financing, cross-border settlement, cross-border capital centralized operation, foreign exchange trading, Shanghai-Shenzhen-Hong Kong Stock Connect, mutual recognition of funds, Bond Connect, Qualified Domestic Institutional Investor (QDII)/Qualified Domestic Limited Partner (QDLP)/Qualified Domestic Investment Enterprise (QDIE) and other products have been introduced to meet the diversified needs of Malaysian enterprises and individuals. Taking foreign exchange trading as an example, the exchange rate of RMB against Malaysian ringgit is relatively stable, and its fluctuation range is significantly smaller than that of US dollar against Malaysian ringgit. Local enterprises in Malaysia can use RMB to settle settlement, reduce the risk of exchange rate fluctuations, and reasonably control settlement costs.

Fifth, China has maintained close contact with Malaysian financial institutions to promote the launch of relatively rich RMB products in Malaysia. According to the research of Guangxi Finance Society, Malaysian financial institutions can provide seven types of RMB products, which basically cover deposits and withdrawals, financing settlement, financial market products, investment and financial products, and so on.

First, RMB deposit products. For time deposits, Malaysian financial institutions can usually offer RMB time deposit products with maturities of 1 month, 3 months, 6 months or 1 year; For demand deposits, there is greater flexibility, generally no interest or low interest rates, and some Malaysian financial institutions can provide stratified preferential interest-bearing products for specific high net worth individuals and corporate customers, taking into account high returns and high liquidity to the maximum extent. The second is more convenient RMB loan products. Some Malaysian financial institutions can provide RMB loans to enterprises with RMB financing needs. Third, RMB trade financing and settlement products. Some Malaysian financial institutions provide RMB cross-border trade financing and settlement products and services for Chinese and Malaysian trade enterprises. Fourth, RMB financial market products. Malaysian financial institutions can provide RMB foreign exchange spot, forward, swap, options, RMB interest rate swap (IRS), currency swap (CCS) and other financial derivatives and RMB lending and other money market products. Chinese banks in Malaysia can offer all of the above products and services except options products. Fifth, RMB personal investment and financial products. Malaysian financial institutions can offer RMB bonds, RMB funds and RMB wealth management products as well as RMB margin trading products. Sixth, some Malaysian financial institutions can provide RMB margin trading services, such as foreign exchange margin trading and stock margin trading; Seventh, other RMB featured products. Some Malaysian financial institutions can provide RMB cash services, dual currency debit cards, RMB pre-settlement, RMB salary cross-border direct exchange and other personal financial products.

According to the data of Guangxi Finance Society, in 2022, the Ministry of International Trade and Industry of Malaysia announced that the Regional Comprehensive Economic Partnership Agreement (RCEP) will come into effect in Malaysia, and Malaysia will use this to establish closer trade links with member states, including China, and promote the integration of regional industrial chain, supply chain and value chain. The influence and application of RMB in Malaysia will be further enhanced. It is reported that in 2022, a total of RMB 1,697.399 billion yuan (including the local RMB real-time full settlement system RTGS) will be cleared in Malaysia, an increase of 22.35%. A total of 369,000 RMB clearing transactions (including the local RMB real-time full settlement system RTGS) occurred, an increase of 33.44%.