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British Consul General to Hong Kong and Macao Caroline Wilson speaks at LSE's Greater China Forum about London as offshore RMB centre.

Thank you Alexander for inviting me to open the afternoon session of your Greater China Forum. I am thrilled to support the first event of this kind that the London Stock Exchange Group has held in Hong Kong; we hope to see many more.

I was delighted to be asked to speak about the role of London as an offshore RMB hub for three reasons. Right time, right place (HK), right Consul General (UK).

The first is how timely LSEG’s renewed focus on China’s capital markets is. China’s capital account opening is developing at speed: whether in the number and size of avenues for capital flow in and out of China, the new markets such as mutual funds, or the huge potential of the Shanghai Free Trade Zone, and others across the country.

The global offshore RMB market grew by 80 per cent over 2013, 9.5 per cent in March 2014 alone; yet the total offshore pool of RMB is only 1 per cent of the total on and off shore liquidity pool and only 16 per cent of China’s trade is denominated in RMB.

So not only is this market thriving, but its potential remains huge. There could not be a better time to start thinking about how to harness these flows of capital.

The second reason is that Hong Kong is the right location for this conference. Hong Kong has been pivotal in developing the offshore RMB market. It enjoys all the advantages of being a trusted international market place and global financial centre as well being part of the PR of China. Hong Kong‘s position is unique.

2013 was another remarkable year for the RMB market here: the RMB deposit base broke the symbolic RMB 1 trillion barrier, if you include Certificates of Deposit. Today, Hong Kong holds a 2/3 share of the whole global offshore RMB market.

Hong Kong remains at the cutting edge of this market and the favoured partner for Beijing. Proof of this came with last year’s announcement of mutual recognition of funds and April’s on Shanghai Hong Kong Stock Connect, giving global market access to onshore Chinese mutual funds market and the A shares market…through Hong Kong.

So Hong Kong is truly the springboard for China’s financial institutions looking to access international financial markets.

And thirdly, I am delighted to have this opportunity to speak about London as an RMB hub because not only does London have a great story to tell, but because this is a priority for the UK Government.

I recently heard Chancellor George Osborne outline his top international priorities. Of which the importance of trade and investment with China, and London’s status as an RMB hub to the UK’s prosperity, featured prominently. The leaps London has made have been no accident – they are a result of deliberate Government policy. And this progress has been made in partnership with an enterprising private sector, many of whom are represented in this room.

So, what has this policy on the RMB delivered? Let us look at the major developments in this market in London over the last few years.

At the UK-China Economic and Financial Dialogue in 2011 the Chancellor, George Osborne, and Vice Premier Wang Qishan agreed to support the development of the offshore RMB market in London.

Although both the UK and China believe the development of the offshore RMB market should be private sector led, this political agreement was critical in laying the foundation for the market’s development.

Cooperation between the two governments is focused on building confidence, addressing obstacles to the market’s development, and putting in place the right regulatory frameworks.

Since this political agreement, the RMB market in London has grown exponentially. There has been a dramatic rise in RMB foreign exchange and trade finance volumes in London in the last few years.

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