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People's Daily Online>>China Business

HK, Singapore, London compete for offshore yuan market

By Wang Hui, Ding Gang (People's Daily)

08:11, March 29, 2012

Edited and translated by People's Daily Online

China’s yuan is becoming increasingly widely used in its neighboring countries to directly buy Chinese goods and invest in yuan-denominated securities and bonds. The offshore yuan market is growing steadily as more and more transactions are settled in yuan at overseas banks.

Hong Kong, Singapore, and London all have a certain amount of international trade settled in yuan, with Hong Kong taking the lead. According to statistics from the Hong Kong Monetary Authority (HKMA), yuan trade settlement in Hong Kong amounted to more than 1.6 trillion yuan in the first 11 months of 2011, or over 80 percent of the total amount of the Chinese mainland’s external trade settled in yuan. Singapore has not released any official data in this regard, but according to local banking industry insiders, yuan trade settlement in Singapore grew several times last year.

Obviously, Hong Kong, Singapore, and London are competing with each other for a bigger slice of the offshore yuan market. Hong Kong has an inseparable bond with the mainland, and thus enjoys a natural advantage. Located in Southeast Asia, Singapore has a close trade relationship with China and a relatively large Chinese-speaking population, which gives it a potential advantage. London relies more on its traditional ties with Hong Kong.

The initial development of the yuan business in the three cities depends on which city will win more policy support from the Chinese government. However, in the long run, they have an equally promising future, which is why Singapore and London are actively developing their yuan business.

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