Hong Kong benefits from rising renminbi
Updated: 2013-10-10 10:51
By Caroline Berg in New York (China Daily)
In the never-ending currency race, China's renminbi continues to gain stride, and Hong Kong in particular is getting an economic boost.
"For more than three decades, Hong Kong has contributed to and benefited from [the Chinese mainland's] opening up and reform process," John Tsang, financial secretary of the Hong Kong Special Administrative Region Government, said in a speech at the Harvard Club in New York yesterday.
In his remarks, Tsang described Hong Kong's latest developments as an international financial center, and he highlighted the importance of the region's special relationship with the Chinese mainland.
"In our interconnected world, our mission is for Hong Kong to evolve into a center of knowledge and information, a center of high quality services and logistics, and a center of opportunity for both local and foreign companies," Tsang said. "At the same time, Hong Kong is becoming more closely integrated with [the Chinese mainland], and it continues to be our greatest advantage."
Tsang said one major advantage that has emerged from the so-called one country two systems model is the "unprecedented free trade agreement" known as the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA).
The 10-year-old agreement allows qualifying products, companies and residents of Hong Kong preferential access to the Chinese mainland market. CEPA regularly adds on supplements, and many of the preferences transcend the concessions made by the central government on its membership to the World Trade Organization.
Tsang said in August he signed the 10th supplement to CEPA, which included more than 17 new preferential measures to assist Hong Kong-based firms to enter Chinese mainland markets.
Half of all international companies in Hong Kong and almost one-third in the Chinese mainland have begun using renminbi to conduct cross-border business, according to a recent survey of 700 HSBC clients commissioned by the lender. Of those surveyed businesses, 53 percent said they would offer discounts of up to 5 percent for transactions settled in renminbi.
Hong Kong's banks have proven themselves nimble since receiving the green light to conduct trade settlements in renminbi in 2010, according to a recent article in the Institutional Investor. Settlement volume rose 37 percent in 2012, to 2.6 trillion yuan ($425 billion) , and grew by 40 percent in the first six months this year, to 1.7 trillion yuan, according to HSBC.
Tsang said the total amount of Chinese renminbi deposits in Hong Kong at the end of July, including certificates of deposit, amounted to about 857 billion yuan, up from about 56 billion yuan in 2008. Hong Kong is the biggest investor in the Chinese mainland and all its provinces, according to Tsang.
Hong Kong is attractive because its financial system, which is separate from the Chinese mainland's, does not post restrictions on the flow of capital, said Tsang.
"We thrive on free flows of information, the free flow of ideas, and the free flow of talent," the Financial Secretary said. "Over the years, Chinese and overseas financial institutions have been drawn to the business friendly conditions that we have in Hong Kong."
(China Daily USA 10/10/2013 page2)