Chinese Offshore RMB Currency and Bond Markets： The Role of Hong Kong

This paper discusses the role of Hong Kong in China’s grand scheme to build up the RMB as a global reserve currency.We highlight the economic importance of Hong Kong to China in terms of channeling foreign direct investment into China,some of which,in the future,will be denominated in the RMB.We discuss the development of China’s RMB currency swap and deposit markets in Hong Kong.These offshore markets enable the RMB to trade freely, setting the stage for the RMB to become fully convertible and allowing market forces to play a role in pricing the value of the RMB,and help in the development of the RMB-denominated bond(or dim sum bond)market in Hong Kong.Finally,we present evidence of the phenomenal growth of the dim sum bond market in Hong Kong,which can further enhance and strengthen the use of the RMB outside China.     

Can Renminbi Appreciation Reduce the US Trade Deficit？

I. Introduction The trade relationship between the USA and China has been contentious during the past several decades since China’s economic reforms in 1978. The trade relationship between the two countries has been strongly constrained and highly politically influenced. Figure 1 depicts US–China trade from 1994 to 2004. US imports from China have been far greaterthan US exports to China over the past 10 years, and the corresponding US trade deficits with China have become increasingl…