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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