The Governor of the People's Bank of China, Zhou Xiaochuan, and the Chief Executive of the Hong Kong Monetary Authority, Joseph Yam, signed a supplementary memorandum of cooperation on a pilot program of cross-border trade between Chinese mainland and Hong Kong on June 29.
The document serves as part of an ongoing effort to allow Hong Kong enterprises to trade with those in the cities of Shanghai, Guangzhou, Shenzhen, Dongguan and Zhuhai using Renminbi as settlement currency.
Zhou noted that the supplementary memorandum will further strengthen financial cooperation between Chinese mainland and Hong Kong. As a result, trade and financial exchanges between the two sides will become increasingly important.
The first trade settlement is expected to take place in July, Yam said. The implementation of the pilot program for Renminbi trade settlement will enhance the ability of Hong Kong's financial system to handle Renminbi transactions. It is hoped that Hong Kong's Renminbi business will continue to develop, and lead to further policies prioritizing the advancement of mutually interactive, complementary and supportive ties between the two financial systems of Chinese mainland and Hong Kong.
Hong Kong has already prepared for cross-border Renminbi settlements said the chief executive of the Hong Kong Special Administrative Region Government (HKSARG) Donald Tsang Yam-kuen. The signing of this agreement will enhance the flexibility of enterprises in business operations, expand the scope of business of local banks, promote the fluidity of Renminbi funds and generate favorable conditions to promote the effective operation of the Renminbi settlement platform, and further develop Renminbi business in Hong Kong.
Tsang also noted that Hong Kong's long-term goal is to become a Renminbi settlement center outside Chinese mainland by operating in accordance with Chinese mainland's relevant policies.
Not only will Renminbi settlement business further develop Hong Kong's position as a pilot site for Renminbi settlements outside Chinese mainland, it will also promote trade and economic development in Chinese mainland and Hong Kong, according to the financial secretary of the HKSARG John Tsang Chun-wah. This will suit the HKSARG's policy of supporting Hong Kong enterprises and helping them cope with the global financial crisis.
This move will not only help factories, but also enable Hong Kong banks to develop a Renminbi lending business, which in turn will allow Hong Kong to consolidate its position as an international financial center, said the Chairman of the HSBC Asia Pacific Vincent Cheng Hoi Chuen.
On June 29 the Bank of China announced that it has already become a settlement bank for cross-border Renminbi settlements with Hong Kong and has prepared well to assume this new role.
By People's Daily Online
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