Beijing needs FX flexibility: China Resources chief

Charley Song Lin, chairman of China Resources (Holdings) said at a conference that Beijing needs to be more flexible in its approach to investment into China. His words appear to clash with the thinking of a senior policymaker at the same forum.

  • 18 Jan 2011
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The chairman of China Resources (Holdings), Charley Song Lin has pleaded to Chinese regulators for more “flexibility” when it comes to opening up its borders to investment overseas with offshore renminbi.

“These are the barriers that need to be broken down,” Song said at the Asian Financial Forum in Hong Kong today in a speech on the greater use for offshore renminbi.

His comments specifically relate to the onerous guidelines for repatriating renminbi raised offshore in the debt markets back into China. China Resources (Holdings) itself has numerous businesses in both Hong Kong and China.

Song’s words may fall on deaf ears in Beijing. At the same venue yesterday (January 17), Fang Xinghai, senior financial policy maker of Shanghai’s Financial Services Office, clearly stated that he did not feel money raised offshore had a place in China.

“The bulk of the money raised in Hong Kong [via offshore bonds] should not be repatriated to the mainland,” Fang said.

The logic is that the money should help to promote the internationalisation of the currency.

Already obtaining the correct approval is a rigorous process and one that has caused a wee bit of consternation in Hong Kong. US corporates MacDonald’s and Caterpillar have successfully managed to use the money raised offshore for onshore business but this route is seemingly not an easy one.

The fear on China’s side is that issuers will rush to Hong Kong to raise debt where funding is cheaper due to the lower interest rates environment.

This was a point reiterated by Feng yesterday who said a flood to Hong Kong’s debt markets could lead the People’s Bank of China to “lose control over interest rates”.

  • 18 Jan 2011

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