|Professor K. C. Chan, Hong Kong's Secretary for Financial Services and the Treasury says at the conference in San Francisco that any city in Northern America like New York, Toronto, Chicago and San Francisco has the possibility to be the next offshore RMB center. (People's Daily Online/Han Shasha)|
San Francisco, May 5, (People's Daily Online)----As cities around the globe competing to copy the success of Hong Kong as an offshore RMB center, which city will be the first in Northern America grasped much attention during professor K. C. Chan's visit to San Francisco.
Professor K. C. Chan, Hong Kong's Secretary for Financial Services and the Treasury said at the conference in San Francisco recently that cities in Northern America like New York, Toronto, Chicago and San Francisco are all possible to be the next offshore RMB center.
Economists and corporate representatives attending the conference hold different opinions and they are optimistic about the internationalization of the RMB. Debra Lodge, head of RMB Business Development and Sales, HSBC NA USA, said that this year has seen a lot of changes in China's economic regulations, like the introduction of the Shanghai free trade zone. She said "2014 is going to be a huge year" although some suspicions can be read in the news release about these changes.
Andrew Pan, senior vice president and head of China Business Strategy East and West bank, said, "It is necessary to build an offshore RMB center here in the U.S." He said that now it's a global economy, especially China now become the second largest economy in the world. The offshore RMB business here will enhance the business relationship between China and the United States. Currently, Hong Kong, Singapore, Taiwan and Frankfort are the offshore RMB centers in the world. From the technical point of view, as an international currency, the RMB has to be a 24-hour transaction. "Europe is going up and I don't think the United States is lagging behind," he said. Some banks in the United States have huge demands from their clients with RMB products. "I guess that part also demands the necessity of setting up a RMB center here in the US."
Professor Chan agreed that in terms of the time zone, one offshore RMB center in North America is quite necessary. "Traditionally, people may think about New York, but it might be Toronto, Vancouver, Chicago or San Francisco. If the cities are in the same time zone, infrastructure provided by the city is one consideration." Since the U.S. Market is diverse and interrelated, any major city has that potential to become a hub.
With sound financial services and mature market facilities, New York is commonly considered as a top destination. However, professor Chan said: "Referring to the current development of the RMB business, I don't think New York has the absolute advantage. Maybe San Francisco has the conditions to make it."
He said that demand is the priority in establishing an offshore RMB business center. California has many companies investing in China and there are many big developer banking services in the western coast areas. California also has good asset management, hedge fund management, real estate management, from which perspective, California is also a big financial center. So demand will decide which city is more competitive.
Darlene Chiu Bryant, executive director of ChinaSF, stated, "It's important for San Francisco to be the center." She said that San Francisco is the first stop when Chinese companies invest in the United States. However, the flow of the U.S. dollar is not coming fast enough for the Chinese investors to close deals unless they already have had a company in Hong Kong or they are able to raise money in the capital market, otherwise it may take them 30 to 60 days to get the cash in the country. "So why not set up a permanent center in San Francisco?" she questioned.
The development of the offshore RMB market is both a prerequisite and an outcome of the currency's internationalization. According to Professor Chan, daily transactions with RMB in Kong Kong are more than that with the HK dollar. He said: "It's almost 80 percent higher than the HK dollar transactions." The expansion of the offshore market will provide more incentive and scope for overseas enterprises and financial institutions to conduct business and financial transactions in RMB.