Delegates to call for renminbi to be made legal tender in HK
Fanny W. Y. Fung in Beijing 10 March 2009
Forty 40 members of the Chinese People’s Political Consultative Conference are issuing a joint call to make renminbi legal tender in Hong Kong.
The delegates said the use of renminbi would allow flexibility in transactions, especially when the US dollar-linked Hong Kong dollar was under pressure from market fluctuations. In a document to be submitted to the nation’s top advisory body, they proposed a number of measures to be implemented with the extended use of renminbi. They suggested:
• mainland and Hong Kong companies be allowed to settle payments in the national currency; • a new type of mainland-based shares be introduced on the Hong Kong stock exchange that would be bought and sold with renminbi; • a faster approval procedure for Hong Kong and foreign banks to receive renminbi deposits.
The renminbi shares would be an alternative for investors to the existing A shares and H shares.
Under the proposal only mainland and Hong Kong residents would be allowed to trade the new shares, so avoiding a premature opening up of the mainland currency and thus problems brought by hot money.
Noting the increasing acceptance of yuan by shops in Hong Kong, CPPCC delegate Alan Hoo, one of the authors of the proposal, said: “Sooner or later renminbi will become a de facto legal tender in Hong Kong ... just like the Hong Kong dollar is widely circulated in Macau.”
Mr. Hoo, chairman of the Basic Law Institute, said making renminbi legal tender in the city would not contravene Article 111 of the Basic Law, which stipulates that the Hong Kong dollar will continue to serve as the city’s legal tender. The mini-constitution did not prohibit Hong Kong from giving renminbi the same status as the Hong Kong dollar, he said.
He initiated the proposal with his CPPCC colleagues, lawmaker Jeffrey Lam Kin-fung; Christopher Cheung Wah-fung, chairman of Christfund Securities; and Peter Woo Kwong-ching, chairman of the Wheelock group. More than 40 local delegates have already co-signed it.
Mr. Cheung said giving renminbi official status in Hong Kong would be the right thing to do politically, as it embodied the country’s sovereignty in the city. The paper also suggested the tax-exemption period for Hongkongers working on the mainland be extended from 183 days to 270 days, and that Beijing invite financial management experts from the city to take part in the country’s financial co-operation with foreign countries.
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Delegates to call for renminbi to be made legal tender in HK
Fanny W. Y. Fung in Beijing
10 March 2009
Forty 40 members of the Chinese People’s Political Consultative Conference are issuing a joint call to make renminbi legal tender in Hong Kong.
The delegates said the use of renminbi would allow flexibility in transactions, especially when the US dollar-linked Hong Kong dollar was under pressure from market fluctuations. In a document to be submitted to the nation’s top advisory body, they proposed a number of measures to be implemented with the extended use of renminbi. They suggested:
• mainland and Hong Kong companies be allowed to settle payments in the national currency;
• a new type of mainland-based shares be introduced on the Hong Kong stock exchange that would be bought and sold with renminbi;
• a faster approval procedure for Hong Kong and foreign banks to receive renminbi deposits.
The renminbi shares would be an alternative for investors to the existing A shares and H shares.
Under the proposal only mainland and Hong Kong residents would be allowed to trade the new shares, so avoiding a premature opening up of the mainland currency and thus problems brought by hot money.
Noting the increasing acceptance of yuan by shops in Hong Kong, CPPCC delegate Alan Hoo, one of the authors of the proposal, said: “Sooner or later renminbi will become a de facto legal tender in Hong Kong ... just like the Hong Kong dollar is widely circulated in Macau.”
Mr. Hoo, chairman of the Basic Law Institute, said making renminbi legal tender in the city would not contravene Article 111 of the Basic Law, which stipulates that the Hong Kong dollar will continue to serve as the city’s legal tender. The mini-constitution did not prohibit Hong Kong from giving renminbi the same status as the Hong Kong dollar, he said.
He initiated the proposal with his CPPCC colleagues, lawmaker Jeffrey Lam Kin-fung; Christopher Cheung Wah-fung, chairman of Christfund Securities; and Peter Woo Kwong-ching, chairman of the Wheelock group. More than 40 local delegates have already co-signed it.
Mr. Cheung said giving renminbi official status in Hong Kong would be the right thing to do politically, as it embodied the country’s sovereignty in the city. The paper also suggested the tax-exemption period for Hongkongers working on the mainland be extended from 183 days to 270 days, and that Beijing invite financial management experts from the city to take part in the country’s financial co-operation with foreign countries.
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