About the Renminbi
As China’s economic rise continues, so too does its desire to have an internationally recognised and utilised currency. Full convertibility is a way off, but on the basis of anticipated reforms, it's widely believed that the renminbi will become a competitive reserve currency within the next decade.
Renminbi development progressing quickly
In recent years, the development of the renminbi has moved faster than many had predicted. Across the board initiatives - from capital account to trade settlement to infrastructure - signal the acceleration of renminbi internationalisation. For investors, corporations, and financial institutions, the opportunities are considerable.
That's why our on-the-ground experience and expertise are more important than ever. We can help you keep up with rapidly changing regulations and take full advantage of the renminbi’s increasing liberalisation.
- A growing force
The renminbi is fast becoming a major world currency. Its increasing internationalisation, combined with China's outstanding growth, presents opportunities not to be ignored.
China is the world's second largest economy
China represents massive opportunity for international businesses, accounting for 10% of the world’s nominal GDP, according to International Monetary Foundation and Standard Chartered Global Research estimates, this will increase to 24% by 2030.
The renminbi is increasingly being adopted as a global trade-settlement currency
In the second half of 2012, 13.3% of China’s trade was settled in renminbi, up from 10.7% in the first half of the same year. We expect that as much as 20% of China’s cross-border trade will be denominated in renminbi by 2015.
These trends will continue to open up tremendous opportunities for your business, as intra-Asian trade grows and China continues to liberalise its currency. Talk to us if you would like to better understand the opportunities available for your business.
- The evolving RMB
The story of the renminbi goes back as far as 1949, but its adoption as a world trade currency began a few short years ago. In 2009, a pilot scheme for cross-border trade settlement was initiated across five mainland China cities, Hong Kong, Macau and select ASEAN countries.
In August 2011, in light of initial success and ongoing regulatory changes, the scheme was extended from 20 provinces to the whole of mainland China. By June 2012, all Chinese companies with an import-export license were allowed to settle trade in renminbi.
Liberalising the Chinese market
On the investment front, the Chinese market was liberalising, too. In October 2011, all domestic mainland corporates were allowed to participate in the Dim Sum Bond market; and by December, channels were broadened to allow for the repatriation of offshore renminbi funds to China for foreign direct investment purposes.
In addition to changes around trade and investment, the Chinese government has made efforts to gradually open its capital accounts – a key requirement for full convertibility. Meanwhile, the development of the China International Payment System (CIPS) offered a solution for more efficient and effective international clearing of renminbi payments.
And the changes are not expected to slow down. With our deep local knowledge and regulator understanding, we can help you navigate the rapidly changing renminbi landscape.
- Your RMB advantage
Trade between China and the rest of the world has increased by 65% since 2009 1 and usage of the renminbi to facilitate this trade has increased more than sevenfold since 2010 2. Further growth in renminbi usage is expected as many companies have not yet fully implemented their renminbi strategies 2.
Switching to the renminbi could create business opportunities
For corporates doing business with China, switching to the renminbi can give exposure to new Chinese customers and/or suppliers who currently find it difficult to trade using foreign currencies. Paying and receiving in renminbi can also help reduce operating costs; the working capital benefit alone can realise estimated savings of up to 3%.
Settling in renminbi also allows treasury management teams to manage FX and interest rate risks rather than being dependent on suppliers/buyers, which may be the case when settling in other currencies.
For financial institutions looking to utilise the renminbi, you’ll be joining over 900 financial institutions in more than 70 countries that currently do business in renminbi 3. It is a tremendous growth opportunity as your clients buy, pay and invest in this currency.
Finding the right banking partner is essential to make the most of the renminbi
Standard Chartered provides a wide range of onshore and offshore investment solutions, financing options and hedging instruments. We are ranked as a leading provider of renminbi services to banks in Western Europe and North America, with at least one in four banks currently using us for our renminbi services 4.
1 Customs Statistics from “General Administration of Customs of the People’s Republic of China”
2 Standard Chartered Global Renminbi Index, November 2012
3 SWIFT RMB Internationalisation Business Insights report
4 FI Metrix Survey 2012