Playing Ball With China

• Get updates on trade, Customs and regulatory changes
• Stay informed on trade compliance seminars,
  workshops and industry events

x

By Peter Hall , Huffington Post Oct 28, 2014

If you build it, he will come. In this case, "it" is not a baseball diamond, but a renminbi (RMB) hub, and "he" is not Shoeless Joe Jackson, but rather a business community eager to trade and invest in RMB. So far, the "build-it first" approach has paid dividends for Hong Kong, London, Taipei, and Singapore. Frankfurt, Luxembourg, Seoul, and a host of other jurisdictions are also showing initial promise after recently signing hub agreements. But will this approach work for Canada?

First off, we do not have a hub, but let's assume for a moment that one will be established that includes all the usual bells and whistles. This would typically include the designation of a local clearing bank by Chinese authorities that can settle transactions locally in RMB, a bilateral swap agreement between the central banks, and direct trading between the RMB and the Canadian dollar (rather than having to loop RMB trades through USD).

It is noteworthy that those quick to establish hubs each have unique advantages. Hong Kong is the historical epicentre of RMB activity and is intimately tied into the mainland economy. London is the global capital of foreign exchange trading. Taipei has more than 80,000 foreign affiliates on the mainland, not to mention about three million RMB-carrying tourists per year. Singapore is the window through which Southeast Asia engages China, and is a centre for corporate treasuries in Asia.

Read Full Article on Huffington Post »