Last year was a calm one for the renminbi. China’s trade and current account surpluses fell below 3 per cent of GDP in 2012, suggesting that the economy was on its way to resolving its protracted external imbalances. Capital inflows eased off and capital outflows rose as the government liberalised controls on outflows. Net accumulation of foreign exchange reserves was just over $130bn, compared to $330bn in 2011 and an average of nearly $450bn per year in the four years preceding that.
While the swap carries enormous geopolitical and diplomatic symbolism – it essentially represents a monetary consummation of the growing trade between the two giants – in practice though, it will change little. Continue reading »
Taiwan’s financial services industry enjoyed a landmark moment this week when cross-border renminbi trade settlement services were officially launched in the island state. The prize: the chance to create an offshore RMB market in Taiwan to mirror that of Hong Kong. Continue reading »
The dim sum bond market is one where “firsts” seem to come along with alarming regularity. It’s hardly surprising – the market is only three years old. But many of those firsts are either technical, incremental or, frankly, not that interesting.
However, here’s a potential new thing that looks well worth some attention: the first non-Chinese government body to raise money with a dim sum bond. Continue reading »
As China grows in economic and political influence, Beijing is determined to turn the renminbi into an international force that might one day rival the US dollar as the world’s most important currency. The FT’s Simon Rabinovitch examines the motives and methods of the internationalisation of the RMB.
As the west wobbles, all eyes are now on China to see what the country’s new leaders will do to stimulate the economy.
While we have little doubt that policy makers will gear up their monetary and fiscal easing, focusing on short-term stimulus misses a far more important trend – a swathe of co-ordinated reforms that will revolutionalise the country’s financial system over the next three to five years. Continue reading »
The renminbi is in the spotlight again. The US Presidential election campaign features both candidates vowing to be tough on China, with Mitt Romney promising to “call China a currency manipulator on day one” if elected.
In fact, based on data for this year, there isn’t a strong basis for a charge of currency manipulation. Meanwhile, with growth slowing and the leadership transition taking many unexpected twists, there are concerns about capital flight from China that could also have implications for the renminbi. Continue reading »
The shadowy world of Chinese capital flows has receded a little further into the dark.
Tracking speculative flows into and out of China has never been an easy task but new developments in the country’s markets have made it even more complicated. In the ensuing confusion, it can look as though Chinese investors are in a state of panic, rushing to the exit with suitcases full of cash. The reality is a little bit duller.
Health warning: We are about to dive into a lot of numbers and wonkery. Continue reading »
Amid all the talk about Taiwan and China’s improving relationship, not much thought is given to a third party that could lose out on business — Hong Kong, historically the back door for Taiwan’s business dealings with the mainland.
As Schive Chi, head of the Taiwan stock exchange, points out, his own efforts to get companies to list in Taiwan – plus the recent news that Taiwan can begin clearing renminbi itself - will help the island reclaim a slice of Hong Kong’s pie. Continue reading »
While you can’t pay your taxes online in RMB in Hong Kong yet, some employees already receive their automated monthly salary payments in the Chinese currency. The offshore RMB (called the CNH because it refers to the Chinese currency in Hong Kong) has a long way to go before it matches the stature or everyday usability of the Hong Kong or US dollars. But it is catching up, fast. Continue reading »
What the People’s Bank of China giveth with one hand, it taketh away with the other. How else does one make sense of Wednesday’s announcement that non-residents in Hong Kong will be allowed to convert unlimited amounts of renminbi at a time when the PBOC is also making efforts to push down the renminbi relative to the dollar?
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