Shenzhen Will Issue Offshore RMB Bonds in Hong Kong in October

Translated by: MOS Fitness Team – Gloria

The Chief Executive of the Hong Kong (Communist) Government, Carrie Lam, revealed at the Legislative Council on September 8 that the Shenzhen municipal government will issue offshore RMB bonds in amount of no more than 5 billion yuan in Hong Kong in October. This will be first time for Hong Kong to issue offshore bonds for any Chinese local government

Border traffic between Shenzhen and Hong Kong

Carrie Lam stated that Hong Kong people should be prepared to welcome a series of major financial measures that will come one after another; and the financial cooperation between Shenzhen and Hong Kong will be stepping up to a new level.

The Shenzhen Municipal Finance Bureau issued an announcement on August 24, stating that one of the first authorized items of the Shenzhen reform pilot is to innovate the local government debt-raising mechanism and issue offshore RMB local government bonds overseas. On the same day, Guangdong Province also issued an announcement that it will issue offshore local government bonds denominated in RMB in Macau, claiming that this will not only be an initial offshore RMB bond issuance by a mainland local government to test the water for overseas investment, but also a symbol of openness of the mainland financial market. 

Boats made out of RMB bills. But can RMB’s internationalization sail?

No matter how flamboyantly the officials kept on bragging, the matter of the local government of the CCP issuing RMB bonds in Hong Kong reveals a few takeaways: The first is to open up the official way for the local CCP governments to draw “blood” or funds from Hong Kong. This is to solve the problem of the economic decline and increasing difficulties in financing for the mainland. Secondly, to promote the internationalization of the RMB that the CCP has been dreaming of, in order to defeat the US dollar’s dominance status. And last, to facilitate the repatriation of overseas RMB using debt, and manipulate the RMB exchange rate as needed.

Reference:
*. Shenzhen to issue offshore RMB bonds
*. Shenzhen’s initial offshore RMB bond issuance

Proofread by: RD16
Edited by: RD16
Posted by: RD16

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