Hong Kong’s push for yuan usage to serve as ‘catalyst’ for corporate adoption

Hong Kong’s push for yuan globalisation is a powerful catalyst that will prompt more companies to use the currency for invoicing and bill settlement with mainland Chinese partners and fuel demand for renminbi treasury products, according to industry leaders.

Some of the city’s finance sector experts also hailed a series of recent government moves, such as taking the lead in settling mainland bills in yuan and issuing more renminbi bonds, as a “milestone” and the “biggest steps” in recent years.

But some academic experts warned that the “most binding constraint” of mainland capital controls remained in place.

Edward Au, Deloitte China’s southern region managing partner, said the shift would encourage yuan adoption among businesses and drive demand for renminbi treasury and hedging products in the city.

“The government’s move to settle expenditure in renminbi sets a strong market signal, catalysing wider corporate adoption,” he said. “More firms are expected to shift to renminbi invoicing and settlement with mainland partners.

“This will drive demand for renminbi funding, treasury and hedging products in Hong Kong, while encouraging businesses to centralise renminbi liquidity, refine foreign exchange strategies and leverage the city as an efficient hub for cross-border treasury management.”