The yuan is still not widely used by mainland companies for overseas acquisitions despite them being cleared by regulators to make greater use of the currency offshore, suggesting more reforms are needed.
Beijing's moves to relax its currency regime since mid-2009 and turn Hong Kong into an offshore yuan-trading centre have had mixed results. Yuan bond issuance in Hong Kong, yuan trade settlements and deposits have all ballooned over the past year, but in the five months since getting permission to use the yuan instead of US dollars, mainland firms have hung back from using yuan to go shopping overseas.
'So far, we have not heard of much overseas direct investment in yuan,' Jun Ma, chief economist for Greater China of Deutsche Bank, told a conference yesterday.
Last month, Hong Kong Exchanges and Clearing chairman Ronald Arculli said Hong Kong was not doing enough with the scheme that allows mainland enterprises to settle some deals in yuan.
Hong Kong has been a gateway for mainland companies making overseas direct investments. Of the US$59 billion in such trade last year, 57 per cent went through Hong Kong.
One reason for the reluctance of mainland firms to use yuan to buy overseas companies, was the lengthy approval procedures involved, according to a banker who did not want to be named. As a result, they preferred to use dollars.