Renminbi Rising: Onshore and offshore perspectives on Chinese financial liberalization

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State Street commissioned the Economist Intelligence Unit to conduct a survey of 200 global institutional investors with exposure to renminbi assets.

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Renminbi Rising: Onshore and offshore perspectives on Chinese financial liberalization

  1. 1. Renminbi rising Onshore and offshore perspectives on Chinese financial liberalisation February 2014 1
  2. 2. Research questions What is the expected pace of financial liberalisation in China? What will happen next? What should be done next? What barriers and obstacles are there to opening the capital account? What will the impact be of opening up? Until then, how will the offshore market develop? How do opinions on these issues differ between investors based in mainland China and those outside it? 2
  3. 3. “Crossing the river by feeling for stones” End of peg to US$ QDII Crossborder RMB trade settlement Dim sum bonds begin RQFII Mutual recogni tion for HK funds (?) RMB retail banking in HK QFII 2002 3 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
  4. 4. Rapid progress • Renminbi overtook 22 currencies in past 3 years Source: SWIFT Watch January 2014 4
  5. 5. Research methodology 5
  6. 6. Survey respondents 6
  7. 7. Key findings 7
  8. 8. A redback world…? • 8 53% of IIs think renminbi will one day surpass US$ as major reserve currency
  9. 9. Not so fast • • 9 Majority think full liberalisation will happen within 10 years But 1 in 5 Chinese IIs think it will never happen
  10. 10. Ranking the renminbi 10
  11. 11. What will happen next? 11
  12. 12. What will happen next? (cont.) 12
  13. 13. What should happen next? 13
  14. 14. What should happen next? (cont.) 14
  15. 15. What will get in the way? 15
  16. 16. Effects of opening up 16
  17. 17. Effects of opening up (cont.) 17
  18. 18. Why go offshore? 18
  19. 19. What to buy? 19
  20. 20. Where to buy? 20 CORP-0955

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