CHINA'S recent relaxation of controls on the flow of yuan across the border will not affect Hongkong's economy, according to Hongkong Bank's latest economic report.
The bank says the amount of Chinese currency circulated in the territory remains relatively insignificant.
The report estimates the renminbi flow at any one time to be 26 million yuan (about HK$35 million at the official rate).
That is about 0.034 per cent of Hongkong dollars in circulation, and about 0.013 of the Hongkong dollar M1 money supply.
''As long as the renminbi inflows are steady, the amount remains relatively small, and there are effective official channels to recycle the cash back to China, the circulation of renminbi should not pose a problem for the local economy; nor should it have a noticeable impact on Hongkong's money supply or inflation,'' says the report.
The bank assumes that 1.5 million Chinese will visit Hongkong this year and all will spend their full allowance of 6,000 yuan in Hongkong, bringing a total nine billion yuan into the territory.