Hong Kong can compete in global yuan trade, FSDC member Qin Xiao says
FSDC member Qin Xiao says as long as reforms are implemented, the city has no reason to fear competition from rivals Singapore and London
Despite facing keen competitive pressure from rival cities for offshore yuan business, a member of a top government advisory body says Hong Kong can still capture huge opportunities as long as it implements reform.
Qin Xiao, a former chairman of China Merchants Group who sits on the government-appointed Financial Services Development Council, said Hong Kong need not worry too much about the likes of Singapore, London and other cities which are competing for the increasingly lucrative yuan business.
"The US dollar is widely traded in many international cities. Hong Kong, London and many other cities can also have very active US dollar trading," Qin said at a media briefing yesterday.
The yuan is not yet fully convertible but China since 2009 has allowed the currency to be used around the world for trade and investment purposes. Initially, most trading was done through Hong Kong but these exclusive rights ended after China last year allowed other financial centres such as London, Singapore and Sydney to do similar offshore yuan business.
"Hong Kong's proportion of yuan business worldwide may decrease in the coming years as a result of other markets also doing it," Qin said.
"However, when more international financial centres are trading the currency, the yuan pie will get bigger and Hong Kong will also get a higher business volume in yuan."