This undated file photo shows a worker counts Chinese currency renminbi at a bank in Lianyungang, east China's Jiangsu province. (PHOTO / XINHUA)

Hong Kong can leverage its connections with the mainland and international financial markets as well as its expertise in the financial services industry to foster renminbi internationalization through promoting more cross-border usage of the renminbi, particularly in the construction of the Belt and Road Initiative, government officials said.

They made their remarks at the Annual Conference of Financial Street Forum 2023 on Thursday. Held in Beijing and Hong Kong simultaneously, the forum was themed “Currency Cooperation and A Diversified International Monetary System”. 

The finance chief added that Hong Kong and mainland financial regulators will continue working together to step up preparations to include renminbi counters in southbound trading of the stock connect programs

The event was hosted by the Beijing Municipal Government, the People's Bank of China, the National Financial Regulatory Administration, the China Securities Regulatory Commission, the State Administration of Foreign Exchange, and Xinhua News Agency.

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“Looking into the future, I am fully confident of renminbi internationalization. In global foreign reserves, cross-border payment as well as foreign exchange payment, the renminbi is gaining more of a share in the above sectors, partly driven by the Chinese mainland’s economic and trade capability, and also fitting into the trend of the world’s countries seeking monetary diversification,” Financial Secretary Paul Chan Mo-po said in his keynote speech at the Hong Kong venue of the annual conference.

At present the offshore renminbi pool in Hong Kong is 1 trillion yuan ($137.2 billion) and 75 percent of cross-border offshore renminbi payments are handled in Hong Kong, according to the finance chief. The city also has a suite of comprehensive renminbi-denominated financial products of deposits, dim sum bonds, mutual funds, futures contracts and insurance.

“We will consolidate and develop Hong Kong as an offshore renminbi hub. We hope that Hong Kong’s renminbi-denominated financial products and renminbi risk management products will be more diversified and broadened so that once investors have offshore renminbi, they will have the investment channels and risk management channels, and then they will be willing to take the renminbi. That helps renminbi internationalization,” Chan said. 

The finance chief added that Hong Kong and mainland financial regulators will continue working together to step up preparations to include renminbi counters in southbound trading of the stock connect programs. He noted that the city needs to make the relevant work more specific and solid, and said he hopes that the scope of financial market connectivity can be expanded in the future.

 “Our sufficient capital pool, rich product ecosystem and diversified risk management tools can definitely play a greater role in serving the increasing renminbi investment and financing needs of Belt and Road countries and at the same time assist renminbi internationalization,” Secretary for Financial Services and the Treasury Christopher Hui Ching-yu said at the Beijing venue of the annual conference.

“As Belt and Road countries increasingly use renminbi for cross-border trade settlement, the demand for renminbi-denominated investment products and risk management solutions in these economies will also increase,” the financial services chief envisaged.

Hui emphasized that Belt and Road countries can take advantage of the current market trend in lower renminbi interest rates to explore the issuance of renminbi-denominated green, blue or social bonds in Hong Kong.

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The annual conference also held a roundtable forum session, during which representatives from the Hong Kong Monetary Authority, Hong Kong Exchanges and Clearing, Bank of China (Hong Kong), the International Monetary Fund, SWIFT and Renmin University of China’s International Monetary Institute shared their views on the topic of international monetary cooperation and cross-border use of renminbi.