Speech by the Financial Secretary to the Treasury.
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It’s a pleasure to be here today, and to speak with such senior figures from the finance sector here in the UK and also China. And I want to thank the City of London for hosting today’s event.
And how appropriate that this event is being held at the Stationers’ Company. The City of London Livery Company for paper, print, and newspaper professionals across the City. After all, papermaking and printing are two of China’s greatest inventions…ancient milestones in China’s scientific and technological advance.
And today’s event, to discuss the internationalisation of the RMB market, is yet another marker for China’s economic advance in the modern world.
And another step to building stronger and closer economic ties between the UK and China.
In September this year the UK hosted the fourth UK-China Economic and Financial Dialogue between the Chancellor and Vice Premier Wang Qishan. A meeting which marked a significant step forward in recognising the economic and financial synergies between the UK and China.
And it sealed a commitment by the two governments to welcome the private sector’s interest in developing the offshore RMB market in London and to work together to support the market’s future development.
The offshore RMB market has grown rapidly in recent years. Just under 10% of China’s trade is now denominated in RMB, up from 1% just 18 months ago.
A rapid rate of growth that reflects the success of the mainland Chinese Government’s policy of internationalising the use of the RMB, and is also a credit to the pioneering work of the Hong Kong authorities to promote the market.
We believe that London provides the ideal complement to Hong Kong, drawing on our world leading expertise, competitive business environment, market depth and European time zone to become the Western hub for offshore RMB market.
London is the logical place to expand and help deepen the RMB market.
But this isn’t an easy task. It will take just the kind of innovation, dedication, and sheer hard work that made London the global centre for the eurodollar markets through the 1960s, 70s and 80s.
For our part, the Government will continue to work closely with the private sector and with the mainland Chinese authorities and the Hong Kong Government to examine any regulatory and market infrastructure issues that need to be addressed.
But it is equally vital that the private sector here in London responds to the opportunity to establish this critically important market.
That means deepening expertise on the Chinese market, applying our skills to meet the particular technical requirements of this market as determined by the Chinese authorities’ chosen approach to liberalisation.
And importantly, it means ensuring we develop a workforce with the cultural background and language skills necessary to forge long lasting relationships with our Chinese counterparts.
I am pleased to say that there is already a high level of commitment to the task from some of Britain’s leading financial intermediaries and market infrastructure institutions. Indeed I am delighted to be here with Peter Sands and Stuart Gulliver today.
Both HSBC and Standard Chartered have been standard bearers for developing the offshore RMB market, recently helping sell Tesco’s RMB denominated bond launched in Hong Kong.
I am grateful too for the continuing work that the City of London Corporation is doing to deepen the dialogue between the financial sectors in the UK and China. The City of London Advisory Council for China which met today is just one example of this important role.
But we need to broaden this commitment and extend it to all parts of the City - to small and large institutions alike if London is to succeed in becoming a thriving and successful Western hub for the offshore RMB market.
And I look forward to working with you all in the years to come to realise that ambition.