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Backgrounder: Chronology of developments of Hong Kong offshore renminbi business center

08-17-2011 15:14 BJT

HONG KONG, Aug. 17 (Xinhua) -- Visiting Vice Premier Li Keqiang said here on Wednesday that the Chinese central government will actively support the growth of the renminbi market in Hong Kong and its drive in building itself into an offshore renminbi business center.

The vice premier said Hong Kong enjoys a natural advantage in developing the offshore renminbi business and new supportive measures for Hong Kong by the central government include the expansion of renminbi circulation channels among others.

Also in the day, Chinese Ministry of Finance issued 20 billion yuan (3.1 billion U.S. dollars) of renminbi-denominated treasury bonds in Hong Kong at a ceremony attended by Li, who is on a 3-day inspection tour to this Special Administrative Region.

It is the third time in three consecutive years the Chinese Ministry of Finance issued renminbi treasury bonds in Hong Kong. The first two issuances took place in September of 2009 and November of 2010, with treasury bonds worth 6 billion yuan and 8 billion yuan, respectively.

The bond issuances, especially the latest one, were of highly supportive significance as Hong Kong grew offshore renminbi businesses and became offshore renminbi business center.

From the initial restriction of circulation outside of the Chinese mainland in very early days to the inflow into the surrounding economies, renminbi has developed into settlement currency or even investment currency during the past two decades. As a global financial center, Hong Kong serves as a unique role in the course of renminbi internationalization.

The following are the major events of the development of Hong Kong's offshore renminbi market.

March 1993 -- The individual visitors were allowed for the first time to bring less than 6,000 yuan across the boarder, and renminbi started circulating in Hong Kong since then.

November 2003 -- The People's Bank of China (PBOC), the country 's central bank, agreed to provide clearing arrangements for banks in Hong Kong to conduct personal renminbi business on a trial basis, including Deposit-taking, Exchange, Remittances and renminbi Cards. One month later, Bank of China (Hong Kong) was appointed as the Clearing Bank for Renminbi business in Hong Kong.

February 2004 -- The renminbi business was officially launched in Hong Kong to facilitate cross-border tourist spending and to further strengthen economic integration between Hong Kong and the Chinese mainland.

December 2005 -- The renminbi business in Hong Kong has been expanded in four broad areas: opening of renminbi accounts by designated merchants; use of renminbi cheques in Guangdong province by Hong Kong residents; exchange and remittance of renminbi by Hong Kong personal depositors and credit limits for renminbi cards issued by participating banks.

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