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Take a new journey with the times. 4|Promote the internationalization of RMB and upgrade the new international financial center

2022-07-14T22:14:28.301Z


In the internationalization journey of the RMB, Hong Kong has always played an important role - first as a "starting line" to help the country explore financial opening up in a "controllable" way, and later as a "combustion booster", through the development of "Shanghai/Shenzhen-Hong Kong Stock Connect"


In the internationalization journey of the RMB, Hong Kong has always played an important role - first as a "starting line" to help the country explore financial opening in a "controllable" way, and later as a "accelerator". Businesses such as “Cross-border Wealth Management Connect” and “Cross-border Wealth Management Connect” will promote the further internationalization of RMB.

However, due to the fact that Hong Kong's financial market has always been dominated by stocks, compared with other RMB offshore centers, Hong Kong's development in RMB bonds and commodities has lagged significantly.

The country has ushered in the "14th Five-Year Plan". As an offshore RMB hub, it is also time for Hong Kong to re-examine the advantages and disadvantages of promoting RMB internationalization, and deeply explore how to improve the important role of the offshore RMB hub and how to serve the international The financial center endows it with a new connotation.

How will Chan Mao-po, who has been re-elected as Financial Secretary, and Xu Zhengyu, Secretary for Financial Services and the Treasury, meet the new challenges?


(Editor's note: On the 25th anniversary of Hong Kong's return to the motherland, which has always advocated "one country, two systems", "Hong Kong 01" hereby publishes the special issue "A New Journey with the Times", which includes seven in-depth reports from the past, recording the key reflections of Hong Kong entering a period of social transformation .This is the fourth, integrated from the 280th issue of "Hong Kong 01" Weekly.)


The offshore RMB market in Hong Kong has important strategic value in promoting the internationalization of the RMB.

(Getty Images)

1. Offshore RMB starts in Hong Kong

The importance of Hong Kong in the internationalization of RMB can be seen from the currency code of offshore RMB - the full name of "CNH" is "Chinese Yuan In Hong Kong"; It is held by merchants and even central banks, and it is to a certain extent "RMB in Hong Kong".

This intimate connection began in 2003, when the People's Bank of China (hereinafter referred to as the "PBOC") appointed Bank of China (Hong Kong) as the world's first offshore RMB clearing bank, and the offshore RMB market has since opened.

E Zhihuan, Chief Economist of Bank of China (Hong Kong), recalled that since 2004, BOCHK began to provide RMB deposits, exchange, remittance and credit card services for individuals. Offshore Renminbi Real Time Payment and Settlement System (RTGS) has established a financial infrastructure for offshore market settlement.

One of Hong Kong's advantages is that it has RTGS in four currencies: RMB, HKD, USD and EUR. All four currencies can be settled in real time and transferred between banks in Hong Kong.

Financial scholar Ba Qing once commented in the book "The Key to RMB Internationalization" that Hong Kong's RMB clearing system has rapidly developed into a "cross-regional offshore RMB clearing platform" because it is connected to local RTGS, and Hong Kong is the only place for all the offshore RMB clearing systems. Among the onshore renminbi clearing systems, the "only one" realizes both the direct connection with the onshore renminbi large-value clearing system and the offshore renminbi clearing system that is linked to the large-value clearing system of overseas local currency authorities. This is the Hong Kong renminbi clearing system. "The greatest uniqueness".

In August 2021, the SAR government invited a number of national experts to go south to preach the opportunities for Hong Kong in the national "14th Five-Year Plan". Zhou Chengjun, director of the Financial Research Institute of the People's Bank of China, gave a speech on the "offshore RMB hub" as one of the highlights of the trip.

He described RTGS as "a powerful tool for Hong Kong as an international financial centre".

For example, when citizens use Wechat Pay or Alipay on a daily basis, "the payment is successful with a single drop", thanks to RTGS.

He also pointed out that the current RMB RTGS settlement volume has exceeded the HKD RTGS settlement volume, which shows the important supporting role of RTGS in RMB internationalization.

E Zhihuan summed up the preliminary preparation of BOCHK as the first milestone of "RMB internationalization", and the second milestone was in 2007.

In January of that year, the People's Bank of China allowed qualified mainland financial institutions to issue offshore renminbi-denominated bonds in Hong Kong, known as "dim sum bonds".

In July, China Development Bank issued its first "Dim Sum Bond", worth 5 billion yuan (RMB. The same below).

Subsequently, national financial institutions and Chinese commercial banks came to Hong Kong to issue RMB-denominated bonds.

"BOCHK" is the first stop for RMB to go offshore, and E Zhihuan is also a witness to the journey of RMB internationalization.

(Photo by Gong Jiasheng)

Today, bonds are still the main product type of RMB securities listed on the Hong Kong financial market. By the end of 2020, bonds accounted for more than 60% of the number of RMB securities products on the Hong Kong Stock Exchange (Figure 1).

E Zhihuan commented that the establishment of "dim sum bonds" provided a "transaction and flow channel" for the offshore RMB capital pool accumulated in Hong Kong, and the funds were "absorbed back to the mainland" through bonds, "completed the cycle".

A series of offshore renminbi business pilots in Hong Kong are just preparations for the renminbi to embark on the "international currency" track.

The RMB "really" started its internationalization journey in 2009, and a major driving force and background that cannot be ignored is the global financial crisis in 2008.

After the subprime housing lending bubble in the United States burst, the dollar liquidity fell into a shortage, and the aftermath scattered across the country as the dollar dominated the monetary system.

Since trade is one of the "troikas" driving China's economic growth, the import and export industries that rely on US dollar settlements have been hit hard.

However, the crisis of the US dollar is also a good opportunity for the RMB to seek a breakthrough. The Bilateral Local Currency Swap Agreement (hereinafter referred to as the Local Currency Agreement) has become China's wonderful work to break the deadlock.

In December 2008, the People's Bank of China and the Bank of Korea signed the framework of the "Bilateral Local Currency Swap Agreement" for the first time.

"After the international financial crisis, a small open economy like South Korea was hit very hard. The US dollar arbitraged South Korea a lot, and South Korea's sovereign credit rating dropped rapidly." Zhou Chengjun recalled, "South Korea has no US dollar, and because of its low sovereign level, it cannot borrow money. There are a lot of imports and exports and foreign debts and repayments to the US dollar.” He explained that because the trade volume between China and South Korea is very large, when the 180 billion yuan local currency agreement is signed, the supply of renminbi will be sufficient, and South Korean companies will be able to conduct trade settlements and transactions in a timely manner. liquidation.

A month later, the Hong Kong Monetary Authority followed suit, signing a local currency agreement with the central bank for a quota of 200 billion yuan.

Today, China has signed bilateral local currency swap agreements with 40 countries and regions (including Hong Kong and Macau), most of which are Asian economies, with an amount of 4 trillion yuan.

The local currency agreement between Hong Kong and the People's Bank of China is the largest in the world, reaching 500 billion yuan.

"Currency swap" forms the basis of the offshore RMB liquidity supply mechanism, and the "cross-border trade settlement pilot" implemented under the currency swap framework is the key to optimizing the supply mechanism.

On July 1, 2009, the People's Bank of China and relevant government departments jointly issued the "Administrative Measures for the Pilot Settlement of Cross-border Trade in Renminbi", officially piloting the "Cross-border Trade Renminbi Settlement" in Hong Kong. Hong Kong, Macao and ASEAN expanded to all countries and regions, and domestic business expanded from five cities to 19 provincial-level administrative regions, and then expanded to the whole country.

By the end of 2020, it accounted for more than 60% of the number of RMB securities products on the Hong Kong Stock Exchange.

(Hong Kong 01 cartography)

Why is the "Cross-border Trade Settlement Pilot" important?

Before 2009, offshore renminbi business was limited to individuals, so the offshore renminbi capital pool could only be exchanged by individuals.

According to Ba Qing’s review, at that time, there were only a small amount of channels for the Mainland to send RMB to Hong Kong, such as “bringing in by tourists from the Mainland”, “underground banks” or Hong Kong people bringing in from the Mainland.

The pilot of cross-border trade settlement means that the current account is further liberalized, and the real economy can obtain RMB funds from the onshore market and transfer it to the offshore market through cross-border settlement.

Since then, the liquidity supply of offshore RMB has also undergone structural changes. Trade settlement has surpassed personal business and has become the main channel for exporting RMB funds from the domestic market to the overseas offshore market.

"This is a huge change." E Zhihuan described that after the introduction of the "cross-border settlement method", the scale of capital "exploded", and RMB products "appeared like spring after rain".

In terms of figures, the scale of RMB cross-border trade settlement rose rapidly from 506.3 billion yuan in 2010 to 7.23 trillion yuan in 2015, an increase of 13 times.

Zhang Ming, deputy director of the Institute of Finance of the Chinese Academy of Social Sciences, wrote in the article "Renminbi Internationalization: Achievements, Issues and Prospects": "At its peak in 2015, about one-third of (China's) cross-border trade was denominated in RMB. settlement."

The trade settlement business has sent a large amount of offshore RMB funds to Hong Kong, making Hong Kong the world's largest pool of offshore RMB funds.

According to the Hong Kong Monetary Authority (according to the monthly currency report of December each year), in 2009, the RMB deposits in Hong Kong were 6.2 billion yuan; in 2010, after the pilot "cross-border settlement" began, this figure soared to 315 billion yuan , reached a peak of 1 trillion yuan at the end of 2014 (Figure 2).

As a witness to the journey of RMB internationalization, E Zhihuan described that the ten-year process of RMB internationalization has brought about breakthroughs in RMB deposits and bond business "from zero to hundreds of billions", which has brought a lot of business to Hong Kong's financial institutions Chance

In 2009, renminbi deposits in Hong Kong were 6.2 billion yuan; in 2010, after the pilot "cross-border settlement" began, this figure soared to 315 billion yuan, and reached a peak of 1 trillion yuan at the end of 2014.

(Hong Kong 01 cartography)

2. "From 0 to 1" adjustment pain

Looking back at the 12 years since the internationalization of the renminbi, although Hong Kong has enjoyed dividends by virtue of its institutional advantages and mature infrastructure, there are still many problems to be solved, not only related to the "next step" of the internationalization of the renminbi, but also related to The future development direction of Hong Kong's financial industry, and how to improve the "offshore RMB center" function.

Renminbi deposits in Hong Kong reached a historical peak in 2014, and then fell sharply. In 2016, Hong Kong's renminbi deposits dropped sharply to half of the peak period, and fell by nearly 40% year-on-year.

Zhang Ming analyzed that the development of the offshore RMB financial market in Hong Kong is obviously "cyclical" and "highly related to the appreciation and depreciation of the RMB exchange rate".

Zhang Ming pointed out that from 2010 to the first half of 2015, the exchange rate of RMB against the US dollar was expected to appreciate, and the offshore market in Hong Kong developed very rapidly.

However, after the "8.11 exchange rate reform" in 2015, the RMB faced greater depreciation pressure, and investors' willingness to hold RMB assets turned cold.

At the same time, in order to ease the pressure of devaluation, the central bank tightened the outflow of RMB, which limited the size of the RMB market in Hong Kong, which was one of the reasons why the RMB market in Hong Kong encountered obstacles.

Zhang Ming pointed out that, whether in trade, finance or commodity trading, the RMB is still difficult to compete with international currencies such as the US dollar and the euro.

(Website of the Academy of Social Sciences)

The "8.11 Exchange Reform" started a downward period for the offshore RMB market in Hong Kong, but it was actually an important adjustment to solve the "long pain" with "short pain".

This should start with "The Impossible Trinity". Nobel Laureate in Economics Paul Krugman once proposed a paradox of international political economy: a country's macroeconomic policy has three goals. They are the independence of monetary policy, the stability of the exchange rate and the free flow of capital, but it is impossible to achieve all three at the same time, and at most only two of them are possible.

Hong Kong is a typical example: Hong Kong chose to give up the independence of monetary policy and implement a fixed exchange rate system with the Hong Kong dollar pegged to the US dollar in exchange for a stable exchange rate and free capital flow.

The economic structures of Hong Kong and mainland China are completely different. The Chinese government obviously cannot give up the "independence of monetary policy". In order to ensure the safety of the "economic engine" of "trade", a relatively stable exchange rate is also very important.

Therefore, China used to impose strict "control" on the current account and capital account of the renminbi.

With the deepening of the internationalization of the RMB, capital controls have also been relaxed, which also means that the RMB exchange rate must move towards "floating".

Before the "8.11 exchange rate reform", the fluctuation of the central parity rate of the renminbi could only reach 2% at most, and the central bank's exchange rate intervention was still relatively large.

However, after the "exchange reform", the central bank lifted the restrictions and introduced a "counter-cyclical factor". The fluctuation of the RMB exchange rate opened a bilateral floating model, which opened the prelude to the market-oriented reform of the RMB exchange rate.

In 2016, the RMB joined the International Monetary Fund's "Special Drawing Rights", and the "8.11 Exchange Reform" was an important driving force behind this milestone.

Nobel laureate in economics Paul Krugman once proposed a paradox of international political economy "The Impossible Trinity".

(Hong Kong 01 cartography)

The cyclicality of the offshore RMB market in Hong Kong also reflects the deep-seated problems in the internationalization of the RMB: arbitrage demand dominates, and currency functions are imperfect.

Zhang Ming pointed out that the foreign currency demand to accelerate the internationalization of the RMB is mainly "arbitrage demand" rather than "real demand".

During the "upward period", the deposit and loan interest rates of CNH and CNY are very different, which breeds speculative arbitrage activities such as "overseas loans under domestic guarantee" (the circulation method is as shown in the figure below).

After the RMB turned to depreciation expectations and the "8.11 exchange rate reform", arbitrage opportunities were greatly reduced, and the momentum of RMB internationalization also dropped significantly, and a "downward period" has also begun.

What is "real demand"?

Zhang Ming explained that "real demand" refers to the purpose of trading entities holding RMB assets "not for short-term exchange rate fluctuations or interest rate differences", but for "long-term trust and dependence" on RMB assets.

If we investigate further, the reason why the international market does not trust RMB assets is related to the imperfect function of RMB as an international currency.

International currency has three main functions: trade settlement, investment reserve and pricing.

The U.S. dollar is the main currency for foreign trade companies to purchase, sell and settle internationally, and the U.S. dollar accounts for 59.5% of global foreign exchange reserves (the figures for the first quarter of 2021). The U.S. and Saudi Arabia have established a “dollar-oil” pricing mechanism , the dollar has naturally become the denomination currency of global commodities.

Zhang Ming pointed out that compared with the trade settlement function, the RMB investment reserve function and the pricing function lag significantly, especially the development of the pricing function is relatively slow.

During the "upward period", the deposit and loan interest rates of CNH and CNY are very different, which breeds speculative arbitrage activities such as "overseas loans under domestic guarantees".

(Hong Kong 01 cartography)

The investment reserve function is embodied in the lack of breadth and depth of RMB financial products.

Ou Jinglin, executive director of the Financial Services Development Bureau, said that China now has more than 130 trading partners, and it is a "normal process" to use renminbi for trade settlement. "

Zhang Ming once led a research team to conduct research in Hong Kong and found that even in Hong Kong, which is already an "offshore center", the RMB-denominated assets provided to foreign investors "are different from other international currencies in terms of scale, type and liquidity."

Ou Jinglin clarified the relationship with "international use": the exchange of offshore renminbi by enterprises is mainly used for trade. After the trade balance is generated, there will be corresponding investment reserve needs, "but there are also channels", so "Hong Kong needs to be more here." Work hard."

In terms of pricing function, Zhang Ming pointed out in the article: "Whether it is the pricing of trade, finance or commodity transactions, the renminbi is still difficult to compete with international currencies such as the US dollar and the euro."

Dong Yiyue believes that there is potential for improvement in the cross-border usability of RMB.

(Photo by Gong Jiasheng)

3. Promoting "from 1 to N" through settlement, reserve, and pricing

"Singapore's average daily foreign exchange transaction volume has recently surpassed that of Hong Kong, and Shanghai yesterday announced the ambitious "14th Five-Year Plan for the Construction of Shanghai International Financial Center".

"Chou Chengjun did not forget to "beat" Hong Kong when he came to Hong Kong to participate in the "14th Five-Year Plan", indicating that many cities are still competing for the "laurel" of the offshore RMB center.

He clearly pointed out that although Hong Kong has the world's largest offshore RMB deposits, offshore RMB settlement business, and offshore RMB bond issuance, "this is not an ideal state, or even a suitable state. In the view of our central bank, we can do By doing better, the role of infrastructure can be brought into full play, and the mission entrusted to Hong Kong during the 14th Five-Year Plan can be brought into full play.”

How should we perform better in order to complete the major mission of "offshore RMB hub"?

We may be able to find the answer from the international demand for RMB and the supply of the three major monetary functions of trade settlement, investment reserves and pricing.

How bright is the prospect of the renminbi?

Dong Yiyue, director and director of policy research at the Financial Development Bureau, used several figures to clarify that the US accounts for about 20% of global GDP, but the US dollar accounts for "far more" global cross-border settlements; China accounts for about 19% of global GDP, but global foreign exchange reserves Assets denominated in RMB in China are less than 2.5%, and the special drawing rights (SDR) in RMB accounts for about 11%, ranking second only to the US dollar and the euro. potential".

However, 'expliciting' the potential for cross-border use of the renminbi will not be easy.

Zhang Ming pointed out, "From the perspective of international financial history, currency changes should significantly lag behind changes in national economic status." From the US GDP surpassing the UK, to the US dollar surpassing the British pound to become the world's largest international reserve currency, there is an interval of about 50 years. .

One of the reasons is that the use of international currency has a strong "path dependence" - when the international community has formed a long-term use habit, unless there is a big problem with the currency, people still tend to use this currency.

Could something go wrong with the dollar that dominates the global monetary system?

Have.

After the outbreak of the new crown epidemic, the United States relied on "release water" to stimulate the domestic economy, but the real economy has not been able to recover, making it difficult to digest liquidity, and the expectation of dollar depreciation continues to intensify. Other currency-denominated assets instead.

International demand is strong, but external risks remain.

E Zhihuan reminded that under the wrestling between China and the United States, after the RMB has achieved remarkable achievements, it may encounter political resistance, and the trend of "reverse globalization" will add unfavorable factors to the external environment of RMB internationalization.

Ou Jinglin said that the current international circulation of renminbi is not large, mainly because of the lack of renminbi products in the market.

(Photo by Yu Junliang)

Of course, the next phase of globalization may not be deglobalization.

Zhang Ming holds a more positive view, believing that the global industrial chain may evolve from "globalization" to "regionalization", because many developed countries realize that "relying on an overly long global industrial chain in which China plays a central role" The model is relatively "fragile" and cannot withstand external shocks such as the epidemic.

The future global industrial chain may be "divided into three": the American industrial chain led by the United States, the European industrial chain dominated by Germany, and the Asian industrial chain dominated by China, Japan and South Korea.

In order to resist de-globalization and maintain its core position in the regional industrial chain, the Chinese government has made frequent arrangements for "Asia-Pacific integration" in recent years, first the "Belt and Road", and then the "Regional Comprehensive Economic Partnership" (RCEP) ).

"The introduction of RCEP will provide an institutional opportunity for China to further integrate with the East Asian region in the economic and trade field." Zhang Ming predicted, "If it is actively promoted, the ASEAN region will become an intensive area for the overseas use of RMB in the future, which will play an important role in enhancing the international status of the RMB. effect."

The core content of RCEP is "substantial tariff reductions and exemptions" for trade between the ten ASEAN countries, China, Japan and South Korea and Australia.

What is related to trade is "settlement".

"The payment function of trade settlement is a starting point for the RMB offshore market." E Zhihuan explained: "Only with trade settlement can there be accumulation of funds and the demand for investment reserves." At present, the main supply of the offshore RMB capital pool is still Trade settlement, "This piece cannot be 'sent', and once it is 'sent' there is no basis."

It is important to cultivate real demand and strengthen the function of trade settlement, but the shortcomings exposed in the early stage of RMB internationalization, as well as the problems that Hong Kong has not been able to solve as an offshore market, are still the imperfect functions of RMB investment reserves.

Even if RCEP is a big boost, it is difficult for real demand to be supported by trade settlement alone.

Zhang Ming pointed out that in order to build a better offshore RMB financial market in the future, Hong Kong should "work hard" outside the stock market. "The more diversified the market types, the stronger the ability to provide different types of financial products. The status of the financial market will rise further.”

Taking the bond market as an example, Hong Kong's "strong stocks and weak debts" has become a commonplace.

"We all hope that the bond market in Hong Kong will grow." Ou Jinglin sighed that Hong Kong cannot only rely on the stock market to become a mature financial market. "One opportunity is Green Bond." He quoted a series of data For example, the country proposed a carbon neutrality target of 2060, which is expected to require 150 trillion to 300 trillion yuan (RMB. The same below), of which about 75% will come from private institutions.

At present, the mainland green bond market has taken the lead in the world.

According to the "China Green Bond Market 2019 Research Report" published by the Climate Bonds Initiative (CBI), in 2019, the total global issuance of Chinese green bonds reached 386.2 billion yuan, of which 2,500 bonds met the CBI green definition. 100 million yuan, and the circulation volume ranks first in the world.

The scale of green bonds in Hong Kong is relatively lagging behind. In 2020, the total scale of green bonds and loans arranged and issued in Hong Kong is only US$12 billion (approximately HK$93.3 billion), and the total amount is only US$38 billion (approximately HK$293.3 billion).

In fact, the main force of green bond issuance in Hong Kong is also mainland enterprises.

However, whether it is a mainland company or an international company, borrowing in Hong Kong generally does not choose to be denominated in offshore RMB, but mainly in US dollar bonds.

As of December 2020, among the listed bonds, there were 1,335 USD-denominated bonds, accounting for 85%, while RMB-denominated bonds accounted for only 5% (Figure 4).

According to statistics from the Hong Kong Stock Exchange, among the listed bonds, there are 1,335 USD-denominated bonds, accounting for 85%, while RMB-denominated bonds only account for 5%.

(Hong Kong 01 cartography)

Fifteen years have passed since "Dim Sum Bonds", the "first step" of RMB-denominated products.

In recent years, the "dim sum bond" market has gradually shrunk. According to the "Hong Kong and Singapore Bond Market" (hereinafter referred to as "Hong Kong Star Bond Market") organized by the Legislative Council Secretariat, the number of RMB bonds issued in Hong Kong has decreased from 149 in 2014 to 42 in 2019 (Figure 5).

One of the reasons for the shrinkage is the gradual opening of the onshore market to bring competition, such as "Bond Connect" and Qualified Foreign Institutional Investor programs (QFII, RQFII).

"From the data of Bond Connect, the volume is very large and the growth is very fast." Ou Jinglin explained that due to the stable performance of the renminbi, the yield rate of mainland bonds can reach 3%, while US bonds are only 1 to 2%, so renminbi bonds are very At the same time, because the yield of onshore RMB bonds is significantly higher than that of offshore bonds, the attractiveness of "dim sum bonds" will naturally drop significantly when restrictions are loosened.

Of course, the Hong Kong bond market is not without its advantages.

Dong Yiyue added that Hong Kong has a wider range of services, and global investors can come to Hong Kong to raise debt, and it can also be purchased by global investors.

The second is product innovation. The Hong Kong government issued a 30-year green bond at the beginning of the year. "The whole of Asia has never seen such a long-term green bond issued by an economy." Denominated green bonds are issues that Hong Kong financial industry stakeholders and even the Hong Kong government need to think about.

Pricing function is the slowest and most difficult part of RMB internationalization, but it is the basis for RMB to exercise its international currency function.

Even if the euro has become the world's second international currency, it is still difficult to shake the "dollar-oil" system. It can be seen that the fifth-ranked renminbi is "a long way to go."

The establishment of a RMB-denominated commodity market will be the key direction for the “restart” of RMB internationalization.

Looking at the global commodity hubs, most of them are "commodity distribution centers with decades of history", which are inseparable from the freight routes and infrastructure facilities that are close to commodity transportation.

For example, Singapore in Asia is a trading hub for rubber, iron ore and precious metals, while Hong Kong lacks logistics and warehousing arrangements for physical transactions due to high warehousing costs.

The research report "Hong Kong's Commodity Market" released by the Hong Kong Stock Exchange in 2020 pointed out that market participants of "base metals" once expressed their demand for storage facilities, and many mainland metal users also required physical delivery for production. "However, providing physical delivery means setting up metal warehouses, and that's not an easy task."

Renminbi bonds issued in Hong Kong fell from 149 in 2014 to 42 in 2019.

(Hong Kong 01 cartography)

In fact, many things are "easy to do".

In the connection of logistics infrastructure, Hong Kong may wish to consider integrating terminal resources and warehousing infrastructure in the Guangdong-Hong Kong-Macao Greater Bay Area.

Judging from the existing conditions, there are three shipping terminals in the Greater Bay Area with the largest throughput in the world - Shenzhen, Guangzhou and Hong Kong are the fourth, fifth and eighth largest terminals in the world. Using modern logistics management technologies, such as digital management, big data deployment, etc., to integrate wharf and warehousing resources, the Greater Bay Area is well-positioned to build the logistics infrastructure required for bulk commodities, and solve the pain points of Hong Kong's high land prices and weak physical delivery capabilities.

In the connection of financial infrastructure, referring to the "Shanghai-Shenzhen-Hong Kong Stock Connect" pilot and the "Bond Connect" pilot in the stock market, it is possible to explore the "pipeline" pilot of commodities, and the first cooperation pilot is Shanghai.

The Shanghai government stated in the "14th Five-Year Plan for the Construction of Shanghai International Financial Center" that it would "consolidate its status as a hub for cross-border use of RMB" and significantly increase the international influence of "Shanghai Price".

The SAR government and the Hong Kong Futures Exchange may consider deepening cooperation with Shanghai, such as arranging for offshore RMB-denominated bulk derivatives to be listed in Hong Kong, and using the Shanghai Futures Exchange's warehousing infrastructure for physical delivery; or launching a "Commodity Link" and other investment channels, so that investors in the two places can access more diversified products and have more choices in foreign exchange hedging.

As Zhang Ming said, Shanghai and Hong Kong "complement each other" in promoting the internationalization of the renminbi - Shanghai is an "onshore center", and the renminbi interest rate and exchange rate are still subject to "certain degree" intervention by the central bank, and the market focuses on "onshore financial products" "Opening of investment channels" to foreign countries; while Hong Kong is an offshore center, the price of RMB is determined by market supply and demand, and the market is mainly driven by international investment and financing based on market prices.

Therefore, when the "Shanghai price" is formed in Shanghai, Hong Kong must go hand in hand to create the "Hong Kong price".

Zhou Chengjun hopes that Hong Kong can form a "fair and reasonable" and "equilibrium price level" renminbi price, which not only forms a corresponding yield curve around renminbi financial assets of various maturities, but also provides "active, deep and liquidity guarantees". ” foreign exchange market, forming the offshore exchange rate of RMB against various currencies.

Zhou Chengjun emphasized that Hong Kong's important mission is to provide "global investors interested in RMB" with RMB financial assets that "meet expectations and meet risk appetite". This also puts forward new requirements for stakeholders in Hong Kong's financial sector. Design with technical content requires services that are in line with international standards, requires transparent, open, rule-based supervision and management, and requires top-level design from the government and relevant departments.”

He believes that the formation of the "Hong Kong price" will help Hong Kong build an "offshore RMB hub" in the "true sense" and "complete sense".

Take a new journey with the times.

1 | Correct yourself to face the new global order and embark on a new journey with the times.

2|Break the separation between Hong Kong and Shenzhen, identify the meaning and then "compensate" for the northern metropolitan area and embark on a new journey with the times.

3|Building a new Silicon Valley in the world allows young people to dare to dream of being a scientist and embark on a new journey with the times.

4|Promote the internationalization of RMB and upgrade the new international financial center

Source: hk1

All news articles on 2022-07-14

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