China and the bloc of Southeast Asian nations have signed an upgrade to their trade agreement, aiming to hit a collective GDP of $3.8 trillion.
Indonesia has issued Yuan-dominated sovereign bonds for the first time ever, worth around $842 million, the country’s Finance Ministry announced.
The Dim Sum Bonds, as they are called, are worth six billion in Chinese currency.
The Indonesian Finance Ministry said the bonds received total orders of up to 18 billion yuan – three times the issuance amount.
“The high level of demand demonstrates trust in Indonesia’s medium-term growth prospects and the government’s fiscal credibility,” the ministry said.
Dim Sum Bonds are yuan-denominated bonds issued outside of mainland China, mainly in Hong Kong.
According to data cited by Bloomberg, China’s offshore bonds are likely to hit record numbers this year.
Dim Sum Bond issuance tripled between 2022 and 2024, reaching 1.4 trillion yuan. The number is expected to grow further this year.
“As corporations accumulate more yuan, they need more yuan-denominated investment products to better manage their offshore renminbi holdings. By investing offshore yuan holdings in dim sum bonds – which is less risky than stocks – enterprises can earn more interest returns than traditional bank deposits,” said Billy Mak Suichoi, associate professor at Hong Kong Baptist University's Department of Accountancy, Economics and Finance.
“When Hong Kong enlarges dim sum bond issuances, this will also spur more cross-currency trading between the renminbi, Hong Kong dollar and US dollar,” he added.
The Indonesian announcement coincided with the start of the 47th summit of the ASEAN Block in Malaysia’s Kuala Lumpur.
During the summit, China and the bloc of Southeast Asian nations signed an upgraded version of their free trade agreement.
The bloc is Beijing’s largest trading partner. Last year, bilateral trade totaled around $771 billion.
The upgraded deal aims to expand cooperation to new areas and hit a collective GDP of $3.8 trillion. It comes as China is facing expanded US tariffs, which threaten to reignite a trade war between Beijing and Washington.
At the summit, Chinese Prime Minister Li Qiang called on ASEAN nations to “uphold free trade and the multilateral trading system, oppose all forms of protectionism, and continuously advance regional economic integration.”
“China is willing to strengthen the alignment of development strategies with various parties, uphold openness and cooperation, and continuously unleash economic potential to explore broader development space,” he added.
According to last month’s UN Development Program (UNDP) report, Southeast Asia faces a significant threat from US tariffs – potentially a nearly 10 percent drop in exports to the US.
A September Report by "Foreign Policy" claimed that Southeast Asian nations are “now preparing for a trading future that does not rely on the US.” The bloc has recently expanded agreements with several countries, including Canada, China, and South Korea.
Author: Saikat Bhattacharya
