A Financial Times Service
China Confidential - Premium Investment Insight
03 September 2012

The authorities in Beijing have given domestic banks in Taiwan the green light to clear transactions in the Chinese currency, potentially giving Taiwanese corporates greater access to renminbi liquidity offshore. Previously, only overseas banking units in Taiwan were allowed to clear renminbi transactions (via Hong Kong). Details of the agreement are vague with no official clearing bank named. A Taiwanese official was also quoted as saying that Taiwan will establish its own renminbi interbank and spot markets using a CNT rate, rather than CNH, which is traded in Hong Kong. This move, if true, strikes us as somewhat confusing given that offshore renminbi (CNH) is already fully convertible. We therefore believe the decision to grant Taiwan official clearing status is motivated more by a desire to strengthen cross-strait relations than by any (real) attempt to internationalise the renminbi.

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CHINA CONFIDENTIAL

An integrated research service from the Financial Times that provides premium, exclusive analysis and predictions on China investment themes.

Using a dedicated FT team of specialists in China and the UK, it taps Chinese sources from the grassroots to the political elite to forecast key trends and issues. It conducts proprietary research to supply its own insights into industry trends and consumer sentiment. By filtering the work of the best Chinese analysts and academics, it keeps you current on key debates as they unfold inside mainland China. Its broad aim is to help the professional investor navigate through the Chinese investment landscape.

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