Li Keqiang: RMB market to expand in Hong Kong

China Vice Premier Li Keqiang unveiled plans to expand the development of Hong Kong’s renminbi-denominated asset market during a visit to the island yesterday, Reuters reported. Li said foreigners will “soon” be able to buy up to US$3.1 billion worth of renminbi-denominated stocks and bonds on the mainland with renminbi. He also said that Beijing is committed to selling Chinese treasury bonds in Hong Kong to anchor the renminbi bond market. Li’s remarks came in the wake of a RMB20 billion (US$3.1 billion) sale of Chinese renminbi bonds in Hong Kong on Wednesday, the country’s largest offshore bond issue to date. At present, foreign investors interested in buying renminbi are limited to buying timed deposits or bonds with interest rate yields of 0.4%-3%, which are less attractive than interest rates on the mainland. HSBC said the move shows Beijing is ready to take the internationalization of the renminbi to the next stage. “By opening up a significant channel for yuan inflows back to onshore asset markets, [it is] closing the circle for the global circulation of China’s currency,” the bank said. Li’s speech, which included numerous and highly specific policy pronouncements, have led to speculation that China’s current leadership is preparing him for a larger role. He is currently expected to promoted to premier.