Exporters and importers in key markets expect to settle more trade volumes in renminbi (RMB) as mainland China continues to play a prominent role in global trade, according to the recent global HSBC Trade Confidence Index.
The survey across over 5,100 exporters and importers in 17 markets globally showed that while the US dollar will remain the dominant trade settlement currency globally, 56% of exporters and importers in Hong Kong, 49% in Malaysia and 24% in mainland China expect to settle some trade transactions in RMB over the next six months. Around a quarter of traders polled from southeast Asia combined, expect to use RMB as trade settlement currency in the next six months while nearly a 10th of traders in North America, the Middle East and Europe, combined, plan to settle future trade in RMB.
Based on responses, Greater China remains top trade partner for Hong Kong, Australia and Vietnam, while China will look to southeast Asia for growth in the next six months. Globally, Greater China is identified among the top three markets with strongest growth prospects in the next six months.
Andrew Long, HSBC’s head of global transaction banking, said: “As businesses globally continue to strengthen their trading links with China, they are at varying degrees, preparing to use RMB as one of their trade settlement currencies in the near future. In 10 years’ time, China’s exports are expected to reach US$2.4 trillion. It is critical for financial institutions to anticipate and keep pace with customer demand, which is slowly catching up with developments around RMB internationalisation. In order for financial institutions to react quickly, they need to either build their own platform or choose a partner with the access, scale and capabilities for RMB clearing and trade settlement.”
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