Yuan-denominated business has been expanding rapidly, enabling Hong Kong to develop as the premier offshore yuan business center, the Hong Kong Monetary Authority (HKMA) said in the report released on April 30.
On the policy front, following Chinese Vice Premier Li Keqiang visit to Hong Kong in August, a series of fresh measures have been implemented, including an expansion of the geographical coverage of the yuan trade settlement scheme to the entire mainland, a promulgation of the administrative arrangements for yuan foreign direct investments and the introduction of the Renminbi Qualified Foreign Institutional Investors (RQFII) scheme.
The HKMA noted that these measures help promote the use and circulation of yuan funds between the onshore and offshore markets, and provide substantial impetus for the development of the Hong Kong offshore yuan business center.
In 2011 about 8 percent of the mainland external trade, or 2,081 billion yuan, was settled in yuan. Hong Kong has developed into the major offshore yuan trade settlement center, with yuan trade settlement handled by banks in Hong Kong amounted to 1,914.9 billion yuan for the year, more than five times the amount for 2010.
The development of an offshore market of yuan bonds, better known as im Sum bonds in Hong Kong continued apace, with bond issuance exceeding 100 billion yuan in 2011, three times the total of 2010.
ompared with other potential offshore yuan centers such as London and Singapore, Hong Kong geographic advantages and support from the mainland authority let the city have an upper hand, said Chris Cao, an investment analyst with Bank of China, told Asia Outbound. he most important thing for HKMA is to continue to use its close relationship with the mainland to expand the edge. /p>
The HKMA has already emphasized that strengthening financial cooperation with the Chinese mainland is important to enhancing the city competitiveness. It said in the annual report it will liaise with mainland authorities on issues related to the continued development of Hong Kong as a premier offshore yuan business center, and to expand CEPA to increase the financial integration between Hong Kong and the mainland.
The HKMA is planning further roadshows to introduce the yuan business platform provided by Hong Kong to overseas investors, companies and financial institutions in 2012.
Preparations are also being made to extend the operating hours of the yuan RTGS system from the current 10 hours a day to 15 hours, according to the HKMA, with an operating window of 8:30 a.m. to 11:30 p.m. by June 2012.
The extended operating window will be able to cover both the Asian and European business hours and the early US business hours, thus enabling participating banks to better serve their customers in different regions.
