RMB Business to Land in Hong Kong Soon

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Last updated at: (Beijing Time) Thursday, July 31, 2003

RMB Business to Land in Hong Kong Soon

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RMB business will soon land in Hong Kong. That was the message delivered by Tung Chee��hwa, the chief executive of the Hong Kong Special Administrative Region. To Hong Kong, which has endured the fall��out from the Asian financial crisis, depressed world economy and the spread of SARS, RMB business brings hope for reinforcing its position as one of the world's top financial centers.

Tung declared last week that the Chinese mainland has agreed to set up an off��shore RMB business center in Hong Kong. Encouraged by the words, bankers in Hong Kong are anxiously competing to be chosen as a RMB clearance bank.

Presently, the Hong Kong Monetary Authority is responsible for the clearance of the Hong Kong dollar. And the HSBC is the only dollar clearance bank and Standard Chartered the only Euro clearance bank. Pundits say the winner will probably be the Bank of China, who has strong RMB reserves and networks in the Chinese mainland.

The RMB in circulation in Hong Kong is believed to stand above 50 billion Yuan, or some 6 billion US dollars as tourists from the Chinese mainland to Hong Kong numbered almost 20 million from 1996 to 2001. And UBS predicts the number will jump to some 20 billion US dollars.

Meanwhile, Hong Kong's own residents are spending more in the Chinese mainland. In 1999, they spent 4 billion US dollars in the neighboring Guangdong Province, 3.6 percent of individuals' consumption that year. The great demand for RMB makes RMB business a profitable prospect.

RMB in circulation in Hong Kong

--Above 50 bln Yuan, or US$ 6 bln

--UBS forecasts RMB figures to jump to 157 bln Yuan, or US$ 20 bln.

--Tourists from Chinese mainland to HK totaled 18.9 million from 1996 to 2001

Hong Kong residents' RMB consumption

Hong Kong residents are spending more in the Chinese mainland

--In 1999, US$ 4 bln in neighboring Guangdong Province,

--3.6 percent of individuals' consumption that year.(cctv)

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