HK RMB offshore center boosts trade
A financial expert attending this year’s National People’s Congress (NPC) session said the creation of an offshore RMB trading center in Hong Kong would make the city Asia’s major destination for RMB currency trading.
Lau Pui-king, professor at the School of Accounting and Finance at Hong Kong Polytechnic University, says the HK RMB offshore center will benefit enterprises around the world. [By Wang Ke / China.org.cn]
Lau Pui-king, a professor at the School of Accounting and Finance at Hong Kong Polytechnic University, believes the establishment of Hong Kong as an offshore RMB trading center will greatly benefit international trade.
“[The center] will not only facilitate the evolution to full RMB convertibility, but also endorse Hong Kong’s position as the leading international financial center of China and the Asia-Pacific Region,” Lau told China.org.cn.
RMB currency is not fully convertible on the Chinese mainland, with restrictions placed on how much foreign currency can be bought.
Generally, two main channels exist for cross-border RMB business trading: domestic commercial banks can exchange money through agents in Hong Kong or Macao, or they can make exchanges using foreign banks.
Since the late 1970s when China opened up its economy to foreign trade and investment, capital flows in and out of China have increased rapidly. China’s economic realignment with the world has given rise to international demand for RMB.
“[RMB] demand will grow as China’s economy becomes increasingly visible on the international stage,” Lau said.
In his March 5 government report, Premier Wen Jiabao said the government should responsibly reform the RMB exchange rate mechanism and encouraged the settling of cross-border trade accounts in RMB whenever possible.
Li Lihui, president of the Bank of China, told China.org.cn that Hong Kong becoming an offshore center matters a lot to its status as a global financial center.
“Since Hong Kong is the springboard for many mainland companies to go global, as well as overseas businesses coming to the Chinese mainland, Hong Kong’s prospective role as the RMB center would handsomely benefit both Hong Kong and companies at home and abroad,” Li said.
Lau also stressed that Hong Kong is the most important financial hub in Asia-Pacific region. The city’s location adjacent to Southeast Asia, which enjoys a trade surplus with China, also makes the city an ideal choice as a RMB trading center, Lau said.
“It’s convenient for companies to undertake their businesses here. They don’t have to convert their money. Both the RMB and US dollar are widely circulated,” Lau said.