Offshore Renminbi (eBook)

Robert Minikin is the Senior Foreign Exchange Strategist with Standard Chartered Bank, Hong Kong. He is a member of the Global Foreign Exchange Strategy team focusing on Northeast Asia FX, with a particular emphasis on "CNH," the new Chinese yuan (CNY) offshore market in Hong Kong. He is a well known commentator on financial market development who is regularly featured both in the print and broadcast media. Mr. Minikin has more than twenty years of experience in financial market analysis. He holds first and second degrees in economics from the University of London. Kelvin Lau is a Hong Kong-based economist covering Greater China, specialising in Hong Kong and the Pearl River Delta in Southern China. Kelvin joined Standard Chartered Bank as an economist in September 2000 and is currently a member of the Greater China research team. With a focus on Hong Kong and the Pearl River Delta (PRD) region in Sourthern China, Kelvin provides macroeconomic analysis and on-the-ground views of major economic issues. His views are quoted by various international as well as local media. He holds a degree in economics from the London School of Economics and Political Science.

Foreword ix

Preface xiii

List of Acronyms and Key Terms xvii

CHAPTER 1 The New Global Role for the Renminbi 1

A Longstanding--but Failing--Path 4

Allowing Renminbi Markets to Flourish 9

Political Tailwinds for Internationalisation 13

Challenges and Consolidation Risks 19

The Renminbi in a Multipolar World 23

CHAPTER 2 Linking the Offshore and the Onshore Renminbi
Markets 25

International Transactions in a Domestic Currency 25

The Starting Point for Renminbi Internationalisation 31

Investability: Opportunities and Challenges 40

Timing Convertibility 45

PBoC and Exchange Rate Policy 50

The Advantages of the Offshore Renminbi 53

CHAPTER 3 The Birth and Evolution of the Offshore Renminbi
Market in Hong Kong 57

A Chronological Look at Key Policy Liberalisations 59

More on Renminbi Trade Settlement in the Post-Big Bang Era
79

From Renminbi Trade Settlement to Offshore Renminbi Deposits
93

CHAPTER 4 New Markets--New Jargon, New Opportunities
101

The Chinese Yuan in FX Spot 101

A New Diversity of Forward Markets 109

Opportunities in the CNH Markets 112

Tracking Returns in CNH Deposits 121

The Dim Sum Bond Market Matures 126

CHAPTER 5 Geographical Expansion of the Offshore Renminbi
Universe 131

From Hong Kong to Haiwai through Trade 133

Renminbi in London and the Hub-and-Spokes Model 139

Direct Renminbi Cooperation with Mainland China 142

Shanghai's Aspiration and Infrastructure Overhaul 147

Hong Kong Is Still in Pole Position 151

CHAPTER 6 Drivers for Internationalisation 163

Public Policy: "Replacing" USD 168

Economics: China's Role in the Global Economy 174

For Investors: Appreciation--but, More Importantly,
Diversification 178

For Corporations: Fairer and More Transparent Pricing 182

For Official Reserve Managers: A New Route to Stability? 187

CHAPTER 7 The Rise of the Renminbi and Its Policy
Implications 193

The Renminbi's Rise: A Threat to the Hong Kong Dollar?
193

The Renminbi's Rise: A Regional FX Anchor 198

The Renminbi's Rise: The SDR and the IMF 206

The Renminbi's Rise: The US Dollar in a Multipolar World
213

Afterword: The Life Overseas with the Rising Renminbi 217

Appendix: The CNH Timeline 223

Bibliography 229

About the Authors 231

Index 233