Speech at Council meeting-Members’ Motions:Strengthening and expanding the advantage of hong kong as the largest offshore renminbi business centre

Strengthening and expanding the advantage of hong kong as the largest offshore renminbi business centre


Deputy President, our country attaches great importance to promoting the development of the offshore Renminbi (“RMB”) market in Hong Kong and supports Hong Kong in strengthening its position as the global offshore RMB business hub, and Hong Kong has been performing well.  I would like to thank Dr SO Cheung-wing for proposing the motion on “Strengthening and expanding the advantage of Hong Kong as the largest offshore Renminbi business centre”.  I support the motion and Mr Rock CHEN’s amendment.

Although the global economy and financial markets have adjusted significantly in the past year due to the COVID-19 epidemic, Hong Kong’s offshore RMB business bucked the trend and registered growth.  The reasons, which are quite complex, include: the arbitrary financial sanctions imposed by the United States (“US”) and the West have forced emerging market countries to embrace local currency settlement; the extraordinary US interest rate hikes and the high cost of US dollar (“USD”) financing have led countries to reduce their reliance on USD; RMB has again proven itself to be a stable international currency after the global foreign exchange market suffered attacks of the strong USD; and the continued opening up of the financial sector in the Mainland has created favourable conditions for the internationalization of RMB.

Hong Kong’s key offshore RMB business indicators have risen steadily in 2022, with an increasing variety of products, more active trading and better market mechanisms, seizing the important window period of RMB internationalization.

In addition to continuing to serve as a global offshore RMB clearing hub, Hong Kong now leads the world as an offshore RMB liquidity pool and continues to rank first in the world in terms of average daily RMB foreign exchange trading volume, and I will not repeat the figures.  However, some figures must be mentioned: the RMB dim sum bonds issued last year amounted to $976.8 billion, representing a year-on-year increase of 85%; and our RMB wealth management market is becoming more mature, with 692 approved RMB investment products in Hong Kong.  The standard premiums of new RMB insurance policies for the first three quarters of last year also reached $2.552 billion.

Hong Kong is uniquely endowed with strengths to develop offshore RMB business, including policy, market and location advantages.  Besides, the Regional Comprehensive Economic Partnership (RCEP), which deepens economic cooperation in the Asia-Pacific region, has contributed to the rapid increase in the scale of RMB internationalized trade and catalysed the international demand for RMB-denominated trading.  In addition, President XI Jinping said at the first China-Gulf Cooperation Council Summit that he would cooperate with the Gulf Arab States in the next three to five years in a number of key areas, including the development of RMB settlement for oil and gas trade.  In a press conference held during the “two sessions”, the People’s Bank of China also said that it would improve the liquidity provision mechanism for the offshore RMB market and enrich the product system.

In the face of these opportunities, the SAR Government and the industry should work together to explore the market needs, formulate development strategies and consciously guide market development in the following three directions:

Firstly, in line with the opening up of the Mainland economy and the strategy of internationalization of RMB, we should play the role of a bridgehead connecting the Mainland with the international market, further improve the offshore RMB market mechanism in Hong Kong, consolidate the clearing infrastructure, strengthen the foreign exchange market, bond market, derivatives market and syndicated loan market, and continuously enhance Hong Kong’s functions in RMB trading, investment and financing, and risk hedging.

Secondly, we should establish a Belt and Road RMB financing and risk management centre, leveraging Hong Kong’s human resources in the financial and professional services industries, product innovation capabilities and extensive business network, so as to radiate our RMB business advantages to countries and regions along the Belt and Road and support their use of RMB settlement for infrastructure and capacity relocation projects, with a view to broadening our directions in promoting RMB internationalization.

Thirdly, we should vigorously promote the use of RMB in the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”), encourage the use of RMB in various economic activities in the region, and continuously open up channels for loans, asset transfers, bond issuance, equity investments, etc. across the boundary.  We should also improve facilitation measures such as the Cross-boundary Wealth Management Connect Scheme as well as cross-boundary account opening and payment services in GBA to attract more GBA cities to issue RMB-denominated bonds in Hong Kong.

Deputy President, the report to the 20th National Congress of the Communist Party of China clearly states that “we will promote the internationalization of RMB in an orderly way”.  This strategic choice of our country is made in response to the changes of the century to proactively grasp the opportunities in development, demonstrating the role we play as a great nation.  The SAR Government should be more proactive in striving for more room at the policy level to enhance its capacity in RMB business in all aspects, so that Hong Kong can become a solid and reliable force for the country in the process of promoting RMB internationalization.

I so submit.