Renminbi’s rapid rise concentrates minds

作者:Mike Rees 2011年12月19日 the Financial Times

In February this year, a multinational client based in Europe told Standard Chartered Bank it absolutely would not be trading in renminbi. In July the bank received a panicked phone call asking it to set up renminbi accounts, and quickly, as the company’s Chinese suppliers would no longer accept payment in dollars.

Very soon, all companies trading with China will have a “renminbi moment”, when they realise that the internationalisation of the Chinese currency is not a matter of long-term strategising, but something on which they have to act here and now. The rise of the renminbi heralds a major change in the global financial system and is happening much faster than people think, with new roles for global corporates, banks and financial centres being thrashed out at breakneck speed.

Even as pundits continue to weigh up the renminbi, debating the ‘ifs’ and ‘buts’ and worrying about market bubbles and slowing Chinese growth, the currency is being adopted apace, driven by real business demand. For many companies, the renminbi now represents an urgent challenge. If they fail to grasp the pace of change – and the opportunity that goes with it – it could be at the expense of their business.
The exponential growth of the renminbi as a trading currency – and of the offshore renminbi market – continues to stun observers. Three years in, despite global headwinds, and the scarcity of arbitrage opportunities as onshore and offshore rates have converged, renminbi redenomination shows no sign of faltering. Trade in renminbi in 2012 is on track for $425bn, up almost 30 per cent on 2011.
Deregulation, too, is picking up pace. This year, China quadrupled to Rmb270bn the quota under which eligible institutions invest in China’s stock market. And last month, the first foreign bank was granted approval for a renminbi denominated cross-border loan quota on behalf of a multinational client. The quota arrangement is a major step forward, as corporates can use it to move previously trapped onshore renminbi cash to offshore treasury centres where it can be managed alongside other currencies.
The renminbi is now on an irreversible journey. Over the next decade, it will be an important international transaction currency, and in 10-20 years, amid substantial capital account liberalisation by China, it will be a significant reserve currency alongside the dollar and other developed currencies.
No one can predict the exact pace at which China will deregulate, nor be certain when the renminbi will achieve something akin to full capital account convertibility. It may be a long time before renminbi assets match the depth and liquidity of dollar capital markets, but focusing on that would be missing the point: the renminbi is becoming an international currency and the transformation will touch every company trading with China, throwing up new opportunities.
Tesco was one early mover, realising the benefits of funding Chinese market expansion through the offshore renminbi bond market. Jaguar Land Rover – with its new joint venture to produce cars in China – is another example of a multinational with substantial Chinese sales that has recognised the renminbi provides the opportunity to manage transaction risk more efficiently.
Financial centres, too, are spotting the potential offered by the renminbi to improve their competitive positions, as room opens up for other centres to play alongside Hong Kong. The race is on to build a strong and differentiated renminbi market proposition, based on capability, timezone, reach and relationships.
Hong Kong has a head start in trade finance and hedging instruments; Singapore can draw on its strengths in private banking, Asian trade and treasury management; and Taiwan, like Hong Kong, has a long history of dealing with China.
London, already the largest western hub for renminbi, has both a Hong Kong-complementary timezone and strengths in investment, foreign exchange and capital raising activities. However, like other centres, London has to move swiftly to build up renminbi liquidity and credibility, or risk losing out to European competitors in Paris and Frankfurt.
Above all, governments and financial institutions will have to work on raising awareness among global corporates. Distracted by the intellectual debate about the long-term future of the renminbi and China’s role in the world economy, many have yet to grasp the wealth of renminbi financing and settlement opportunities already available.
Renminbi internationalisation is happening, and now is the time to get ahead and seize the advantage.

Mike Rees is chief executive of wholesale banking at Standard Chartered(渣打银行大额银行业务执行总裁)


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