Doha has become the first clearing and settlement hub for the Chinese renminbi.

Officials this week sealed a deal which will allow businesses in Qatar and the region to trade with China directly in Rmb, meaning they can bypass the US dollar. The initiative had been in the offing since November 2014, when a memorandum was signed to that effect.

The Industrial and Commercial Bank of China (ICBC) will be the clearing bank for Chinese currency deals done in Doha, with the oil-rich state following Hong Kong, Macau, Singapore, London, Frankfurt, Paris, Luxembourg, Seoul, Sydney and Toronto in opening such a facility.

Presently, much of the oil trade out of Qatar is conducted in US dollar, meaning traders doing business with China are experiencing currency conversion costs if they wish to settle in Rmb. This should provide some cost saving for those doing business with China.

The deal was signed by the Qatar Central Bank and the People’s Bank of China (PBOC) in Doha as both parties seek to expand the East-West trade corridor. Africa is thought to be a consideration too – much of China’s business with Africa is conducted through the Middle East, and vice-versa.

Bilateral trade between Qatar and China reached some US$11.5bn in 2013, and is expected to expand further still with this agreement.

In a statement, the Qatari government said: “As the first clearing centre in the region to offer yuan clearing and settlement, this deal will increase financial connectivity between China, south-west Asia and the Mena region and increase opportunity to expand trade and investment between China, Qatar and the region. The centre provides access to China’s onshore currency and foreign exchange markets for local financial institutions fostering cross-border use of the yuan in the region.”

“Banks are now able to expand their investment portfolios of financial services and products through the facilitation and issuance of financial instruments such as the trading of debt market products, interest rate and commodity derivative products denominated in yuan.”

Meanwhile, Dubai officials have not ruled out establishing a similar facility in the UAE – which is a much bigger trading partner with China. This year, bilateral trade between the UAE and China is expected to top US$60bn.

Speaking to local press, a Dubai government official said: “There are different ways to do this [expand trade with China]. It has to make sense as a business proposition and I’m not sure Qatar has the volume of trade with China to justify it. We are continuing to look at the possibility. The support of the Central Bank is crucial.”