The Chinese yuan may become fully convertible in 2017, providing ample business opportunities for Hong Kong, Taiwan and other places aiming to become offshore yuan trading hubs, HSBC PLC’s top executive in Hong Kong said in Taipei on Friday.
“We expect yuan to be fully convertible in 2017 in terms of meeting trade settlement and investment needs,” said Anita Fung (馮婉眉), HSBC Hong Kong chief executive officer.
Full convertibility comes when people have free and easy access to yuan for any purpose, and the market is both transparent and accountable, she said.
Moves by the Chinese government to increase exchange rate flexibility and simplify transaction processes have changed the dynamics of cross-border yuan business, with the number of firms using the yuan dropping significantly on expectations that the currency would appreciate, Fung said.
Increasingly, real demand — from exchange risk management and operational convenience — is underpinning cross-border yuan transactions, she added.
At present, only 12 percent of cross-border trade in China is settled in yuan, Fung said. The ratio may rise to more than 30 percent in 2015 since more than 50 percent of Chinese companies are willing to offer price discounts in return for using yuan to settle trade, she said, adding that the yuan may grow to account for 50 percent of trade settlements in the Asia-Pacific region during the same period.
Taiwanese exporters should be incentive to use yuan for trade settlements since China is the nation’s largest trading partner, accounting for 40 percent of its outbound shipments, Fung said.
All these figures lend support to active yuan convertibility, she said.
Cities and financial companies in the region should cooperate rather than compete with each other while yuan’s internationalization pans out, the chief execuvite said.
“The yuan business will grow exponentially in the foreseeable future as China gains power in the global economy and concerns that Taiwan or Singapore may catch up with or overtake Hong Kong in the yuan market are unfounded,” Fung said.
The pie is so large that it will take a long time before the market turns into a zero-sum game, she said.
In addition, thanks to early-starter advantages, Hong Kong is already a well-established offshore yuan market in terms of depth and broadness. Also, having Beijing’s support will help the territory secure its leadership position in the market, Fung said.
However, Taiwan has still made impressive progress in developing an offshore yuan market, judging by the rapid accumulation of yuan deposits and the emerging yuan debt market seen over the past four months, Fung said.
Ultimately, even though some central banks have voiced plans to build positions, it will take a long time for yuan to become a reserve currency, she said.
This story has been updated since first published
Semiconductor business between Taiwan and the US is a “win-win” model for both sides given the high level of complementarity, the government said yesterday responding to tariff threats from US President Donald Trump. Home to the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Taiwan is a key link in the global technology supply chain for companies such as Apple Inc and Nvidia Corp. Trump said on Monday he plans to impose tariffs on imported chips, pharmaceuticals and steel in an effort to get the producers to make them in the US. “Taiwan and the US semiconductor and other technology industries
SMALL AND EFFICIENT: The Chinese AI app’s initial success has spurred worries in the US that its tech giants’ massive AI spending needs re-evaluation, a market strategist said Chinese artificial intelligence (AI) start-up DeepSeek’s (深度求索) eponymous AI assistant rocketed to the top of Apple Inc’s iPhone download charts, stirring doubts in Silicon Valley about the strength of the US’ technological dominance. The app’s underlying AI model is widely seen as competitive with OpenAI and Meta Platforms Inc’s latest. Its claim that it cost much less to train and develop triggered share moves across Asia’s supply chain. Chinese tech firms linked to DeepSeek, such as Iflytek Co (科大訊飛), surged yesterday, while chipmaking tool makers like Advantest Corp slumped on the potential threat to demand for Nvidia Corp’s AI accelerators. US stock
The US Federal Reserve is expected to announce a pause in rate cuts on Wednesday, as policymakers look to continue tackling inflation under close and vocal scrutiny from US President Donald Trump. The Fed cut its key lending rate by a full percentage point in the final four months of last year and indicated it would move more cautiously going forward amid an uptick in inflation away from its long-term target of 2 percent. “I think they will do nothing, and I think they should do nothing,” Federal Reserve Bank of St Louis former president Jim Bullard said. “I think the
Cryptocurrencies gave a lukewarm reception to US President Donald Trump’s first policy moves on digital assets, notching small gains after he commissioned a report on regulation and a crypto reserve. Bitcoin has been broadly steady since Trump took office on Monday and was trading at about US$105,000 yesterday as some of the euphoria around a hoped-for revolution in cryptocurrency regulation ebbed. Smaller cryptocurrency ether has likewise had a fairly steady week, although was up 5 percent in the Asia day to US$3,420. Bitcoin had been one of the most spectacular “Trump trades” in financial markets, gaining 50 percent to break above US$100,000 and
RSS