Renminbi Business in Hong Kong

Renminbi business in Hong Kong started in 2004. Initially, the arrangement covered mainly personal banking business, including deposit-taking, currency exchange, remittance, debit and credit cards, and cheque payments. Starting from 2007, Mainland financial institutions have been issuing renminbi bonds in Hong Kong, and the range of issuers have expanded to the Ministry of Finance, the Mainland subsidiaries of Hong Kong banks, local and multinational corporations, and international financial institutions. Meanwhile, the introduction of the pilot scheme for renminbi trade settlement in 2009 and its expansion in 2010 represents another breakthrough for the development of offshore renminbi business in Hong Kong. With the broadening of the enabling policy framework, banks and other financial institutions in Hong Kong now offer a full range of renminbi services, including deposit-taking, currency exchange, remittance, trade finance and wealth management. To support the operation of renminbi business, the Renminbi Real Time Gross Settlement system in Hong Kong was upgraded from the Renminbi Settlement System in June 2007. Below is an overview of these renminbi services.

Currency Exchange

Corporate customers can exchange renminbi with participating banks in Hong Kong according to market conditions and practices and there is no specific limit on such transactions. For personal customers, they can exchange renminbi for Hong Kong dollars or vice versa, up to the equivalent of RMB20,000 per person per transaction, if the exchange is made in cash, and up to RMB20,000 per person per day, if the exchange is made through a deposit account.

Remittance

There is no restriction in Hong Kong on renminbi fund transfers. Cross-border fund transfers to and from the Mainland are subject to relevant rules and regulations in the Mainland. For instance, personal customers can remit renminbi to their own accounts with their Mainland banks, subject to a daily limit of RMB80,000 per account.

Credit and Debit Cards

Hong Kong participating banks can issue renminbi debit and credit cards to Hong Kong residents for use on the Mainland. Renminbi debit and credit cards issued by Mainland banks are also accepted by retailers in Hong Kong.

Cheques

Renminbi cheques drawn on current accounts held with Hong Kong participating banks can be used both in Hong Kong and on the Mainland. Within Hong Kong, there is no restriction on the renminbi cheque payment between different customers, whether within the same bank or not. On the Mainland, renminbi cheques can be used for consumer spending in Guangdong Province, subject to a daily limit of RMB80,000 per account.

Renminbi Bonds

Any company or institution, whether in Hong Kong or overseas, can issue renminbi bonds in accordance with the usual regulatory and market practices in Hong Kong.

There is no restriction in Hong Kong on the use of the proceeds raised from a renminbi bond issue. Issuers are free to remit the proceeds to places outside Hong Kong or convert them into other currencies. For remittance of renminbi funds to the Mainland, issuers will need to obtain necessary approval from the relevant authorities in the Mainland.

Any person, company or institution, whether in Hong Kong or overseas, can invest in renminbi bonds issued in Hong Kong. An investor will need to have a renminbi bank account to make subscription payments, trade and receive interests and principal repayments.

Cross-border Trade Settlement

The launch of the pilot scheme for cross-border trade settlement in renminbi in 2009 was a significant milestone in the continuing development of renminbi business in Hong Kong. The scheme was further expanded in 2010, with enterprises in 20 provinces and cities in China now having the option to settle their trade transactions in renminbi with any part of the world. The list of eligible enterprises was also expanded, increasing the number of Mainland enterprises that can settle merchandise exports in renminbi from 365 to 67,359.

References

• Administrative Rules on Pilot Program of Renminbi Settlement of Cross-border Trade Transactions
• Regulations for Implementing the Administrative Rules on Pilot Program of Renminbi Settlement of Cross-border Trade Transactions
• About the Expansion of the Pilot Program of Renminbi Settlement of Cross-border Trade Transactions (Chinese Version)
• List of Eligible Mainland Enterprises that Can Settle Merchandise Exports in Renminbi (Chinese Version)