China to Begin RMB-Settlement in HK, Macao and ASEAN

Locals pass by the Hang Seng office in Hong Kong.  Dong Ning

     The State Council announced in late December 2008 that in an effort to galvanize circulation, kindle consumption and bolster foreign trade it would allow tentative RMB settlement of goods transactions between Guangdong/ the Yangtze River Delta and HK/Macao, and between Guangxi/Yunnan and ASEAN. Prior to this move the central government promulgated a 14-measure package to promote economic development in Hong Kong, the most notable being the permitting of eligible companies in Hong Kong to pay for their transactions in RMB. The new policy is expected to save HK enterprises three percent in exchange commissions, thus enhancing trade ties between the special administrative region and mainland. If successful, it could mark the first step towards RMB internationalization.