BEIJING - Financial cooperation between China and Singapore is expected to go from strength to strength as wide-ranging agreements were reached during President Xi Jinping's visit to the city-state over the weekend.

The two countries agreed to promote the use of renminbi in bilateral trade and investment, improve the use of the renminbi clearing bank in Singapore, and steadily advance cross-border renminbi business,according to a joint statement issued at the end of Xi's visit.

The two sides will work towards the early opening of the Asian Infrastructure Investment Bank.

They will also work together to make Singapore a financial service center for regional cooperation on industrial capacity as China pursues its Belt and Road Initiative.

An upgrade of the seven-year-old free trade agreement (FTA) is planned, along with a third government-to-government (G-to-G) project, in Chongqing.

Mutual benefit

Analysts believe closer financial cooperation is both necessary and achievable through "a partnership of all-round cooperation keeping with the times."

Improved financial cooperation with Singapore will increase the global use of the renminbi and improve its chances of being included into the International Monetary Fund's Special Drawing Rights (SDR) basket, said Sang Baichuan, dean of the International Economic Research Institute, University of International Business and Economics.

Singapore can cement its position as a financial center by engaging with China in renminbi businesses. Singapore's renminbi ambitions match perfectly with China's objectives, he said.

Singapore faces new development opportunities through the new G-to-G project in Chongqing, following successful projects in Suzhou and Tianjin. The new project in Chongqing will serve the needs of the Belt and Road Initiative and a proposed economic belt along the Yangtze River.

With its mature capital market and expertise in infrastructure financing, Singapore can play an important role in infrastructure development in Asia, said Bai Ming, a researcher at an institute under the Ministry of Commerce.

Stellar track record

The Singapore branch of the Industrial and Commercial Bank of China (ICBC) became the renminbi clearing bank there in 2013, and last year, Singapore overtook London to become the biggest offshore renminbi center outside Hong Kong, with renminbi settlement of 37.5 trillion yuan ($6 trillion). Settlement in the first three quarters of this year reached 47 trillion yuan.

China and Singapore announced direct currency trading in October last year, crucial for formation of a direct exchange rate between the renminbi and Singapore dollar, reducing exchange costs for trade and investment.

There has also been an expanding range of renminbi investment products in Singapore, particularly offshore renminbi bonds.

Last year, China issued Lion City bonds worth 12.7 billion yuan. In September last year, ICBC issued 4 billion yuan Lion City bonds, a record amount, for any single bank at one time.

"China and Singapore will have huge room for cooperation as the internationalization of the renminbi picks up speed and the AIIB goes into operation," Sang said.