Coronavirus, growing China-Southeast Asia trade ties could drive offshore use of yuan: FSDC economist
- Southeast Asia is now China’s largest trading partner, creating an opportunity to enhance the use of the yuan in international transactions
- Hong Kong could capitalise by providing professional financial services and enhancing status as a leading offshore yuan business hub
The coronavirus pandemic and US-China trade tensions are pushing China towards increased regional coordination in trade that may become a catalyst for yuan internationalisation, according to professor Ba Shusong, Chief China Economist of Hong Kong Exchanges and Clearing.
“Compared to previous years, we see something has changed,” Ba said on Tuesday at an online press conference organised by Hong Kong’s Financial Services Development Council (FSDC).
“While US-China trade has declined, this year is the very first time that Southeast Asia became China’s biggest trading partner. So cooperation within the region is really strengthening.”
Ba, who is also a member of the FSDC’s Mainland Opportunities Committee, said the trend could be to Hong Kong’s advantage. The city could play an important role in providing professional financial services given its reputation as a global financial centre, he said.
The shift in manufacturing supply chains, the adjustments, will mean a new set-up of opportunities and demand for financial services
As countries and companies push for diversification of supply chains following the pandemic, Hong Kong could help development of new business channels by offering third-party accreditation services to support China’s supply chains and trade connections with neighbouring countries such as Vietnam and Indonesia.