HSBC's Guide to Cash, Supply Chain and Treasury Management in ...

Internationalisation of the RMB
Riding Out the Storm in Style
The development of the offshore RMB market is an important step in the internationalisation of the
RMB. The pool of offshore RMB is being built up rapidly – RMB is increasingly used as the invoicing
currency for international trade and settlement, and a growing number of Chinese cities can remit RMB
overseas to settle their trade obligations. Areas that require further attention are the breadth and depth
of RMB offshore investment and the mechanism to repatriate funds for use within Mainland China.
While such developments will take time to mature, the recent policy announcements by the Mainland
government are steps in the right direction. For example, HSBC recently infused capital in RMB to HSBC
(China). The development of the dim sum bond market in
Areas that require further
attention are the breadth
and depth of RMB offshore
investment and the mechanism
to repatriate funds for use
within Mainland China.
Asian Treasury Centre Choices
Hong Kong is taking shape. In time, the Hong Kong stock
market will allow shares to be listed and traded in RMB as
well.
As the liberalisation continues, the RMB may take a route
of gradual, rather than sudden, appreciation. It may also
experience short-term volatility. Therefore, there is a need
for risk management tools to be further developed to hedge
against such risk.
Singapore, Shanghai and Hong Kong are Asia’s three most popular treasury centres.
Singapore will continue to be an attractive centre for multinational corporations (MNCs) due to its
proximity to India and Southeast Asian markets and its successful track record in market development
such as the derivative market and the fund management industry. The nation’s English language
proficiency remains its competitive advantage and its triple-A sovereign rating is an important selling
point in its establishment as a wealth management centre. The government is strongly committed
to high-end management education and actively encourages employment of expatriates to mitigate
possible talent gaps and support future growth.
Shanghai has set a timetable to achieve international financial centre status by 2020. It is already the
centre for the domestic RMB financial market in terms of the size of both the equity and bond markets.
The volume of international cross-border flows is subject to the timetable of the liberalisation of the
capital account. Currently the intermediation of capital outflow is through the Qualified Domestic
Institutional Investors (QDII) scheme. Significant developments in the Shanghai financial markets are
anticipated in the years to come.
Hong Kong has become the de facto offshore RMB centre because of its strong economic ties with
the Mainland relating to trade and investment flows, its proven track record as an international financial
centre in capital formation and by virtue of being a part of China. The internationalisation of RMB
will further strengthen Hong Kong as an Asian treasury centre. The Hong Kong Monetary Authority
(HKMA) and the Financial Services and the Treasury Bureau (FSTB) have contributed tremendously to a
HSBC’s Guide to Cash, Supply Chain and Treasury Management in Asia Pacific 2012 31
The New Economic
Landscape