In Box: To renminbi or not to renminbi

Despite growing calls from China-based organisations for overseas firms to settle trade in the Chinese currency, the renminbi (RMB), most New Zealand businesses remain firmly wedded to other currencies.
Noel McNamara, CEO of HSBC in New Zealand, says that both here and in Australia there’s growing conversation around the concept of RMB trade but not lot of practical understanding around its execution.
“People understand the Chinese currency is not yet fully convertible but not what products are available and the style of discussion you need to be having with Chinese entities about trading in RMB.”
McNamara says the Chinese government has taken cautious and long-term approach to how it rolls out international trade settlement in RMB.
Still, from small beginnings, international trade in RMB continues to rise fast.
“Between 2010 and 2011,” says McNamara, “China’s external trade settlements in RMB rose from RMB5 billion to just over RMB2 trillion to make up around nine percent of China’s total external trade.”
To date, external flows have been channelled through Hong Kong and latterly Taiwan, which opened up for RMB trade settlement business earlier this year.
David Thomas, CEO of Sydney-based consultancy Think Global, notes other major cities around the world, including London and Sydney, are also investigating options for setting up as RMB trading centres.
McNamara says settling deals in RMB is culturally still new for Kiwis and Aussies alike, and calls for more understanding around its practical implementation.