Hong Kong may become a renminbi trading center for developing countries as Beijing looks at ways to gradually expand its currency’s global footprint, the South China Morning Post reported. The State Council is studying a proposal to extend financial aid to developing countries in renminbi rather than US dollars. Given that the Chinese currency is not fully convertible, the beneficiary nations could only use it to buy products made in China. Therefore, the government may allow these nations to trade their renminbi in Hong Kong, which would both give them flexibility and help establish Hong Kong as a renminbi offshore center. Other measures under consideration to boost Hong Kong’s renminbi business include allowing Hong Kong banks’ mainland branches to issue yuan-denominated bonds in Hong Kong. A pilot scheme is currently being rolled out under which traders in certain cities can settle cross-border deals in renminbi with Hong Kong traders.
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