HK will still become leading RMB center

Competitiveness will ensure Hong Kong’s leadership.

Hong Kong will become a leading offshore renminbi or yuan financial center even if the RMB becomes fully convertible immediately, said visiting U.S. Undersecretary for Financial Services and the Treasury Julia Leung.

She noted that in the process of the yuan becoming fully convertible gradually, Hong Kong will still have room to develop into a leading offshore yuan financial center. There are pitfalls to this leadership, however.

"Once the yuan is fully convertible, it will threaten Hong Kong's position as an offshore yuan financing center,” she said/ “If Hong Kong cannot maintain its competitiveness and slash the cost of financial services activities, investors may turn toward the mainland onshore market."

Leung said that prospects for the yuan’s appreciation will induce more international organizations based in Hong Kong to adopt the Chinese currency as more yuan funds flowed into the city through the trade settlement channel.

She expected offshore yuan financing activities in the city to be more broad-based with the increasing use of dim sum bonds, while yuan-denominated investment products will become more diversified.