HSBC welcomes two significant announcements today strengthening China-Australia financial links – a Memorandum of Understanding to establish official renminbi (RMB) clearing arrangements in Australia and an RMB Qualified Foreign Institutional Investor (RQFII) quota of RMB 50 billion.
Tony Cripps, Chief Executive of HSBC in Australia said: “Australia’s economic future is undeniably linked to China. Becoming an offshore renminbi clearing centre and receiving an RQFII quota is an amplifier for further cross-border linkages with China.”
“China’s programme of RMB internationalisation is part of its broader re-integration with the global financial system. Rarely in history has a currency achieved a global profile as quickly as renminbi.
“Over the past few years, China’s drive to internationalise its currency has given rise to vibrant new financial markets, changed the face of international trade and opened up new possibilities for companies and investors in Australia and around the world,” Cripps said.
While Australian companies can already access RMB clearing and settlement via Hong Kong, a regional RMB clearing centre onshore in Sydney will support growing demand for RMB-denominated trade settlement and, increasingly, investment. It will do this by creating the
infrastructure needed to facilitate high volumes of RMB-denominated business onshore and deepen our RMB liquidity pool in Australia.
“For Australian companies this means more efficient and rapid settlement of RMB-payments and access to more Chinese customers who prefer to deal in the Chinese currency. Australian businesses should be RMB-ready to capitalise on these financial and relationship advantages,” Cripps said.
The allocation of an RQFII quota gives Australian institutional investors the chance to buy directly into opportunities in China’s previously restricted capital markets. Cripps continued: “Ever since Chinese authorities began accelerating the opening up of the Chinese
domestic capital markets in 2011, global institutional investors have been itching to invest in RMB assets that have direct exposure to China. Australia’s RQFII quota means our institutional investors can now gain direct access to China.”
These announcements add to a growing list of developments supporting Australia-China connectivity, including a bilateral currency swap agreement, an AUD/CNY direct trading deal, and most recently a milestone Free Trade Agreement with China. Cripps said: “More so than ever, today’s announcements are paramount for Australia’s future China strategy.”
Cripps concluded: “HSBC has been at the forefront of the RMB growth story in Australia. We have been supporting our customers’ participation in RMB business by connecting clients to our network in China and by demystifying the perceived complexities of doing business in China. And we’re seeing this pay off with many of our clients, big and small, reaping the financial and relationship benefits.”
“We are delighted by today’s announcements and look forward to further supporting our clients and Australia’s connectivity with China,” he said.