British Columbia companies doing business in China could find themselves at an advantage by closing their deals in Chinese yuan instead of in U.S. dollars.
At a conference organized by the Business Council of British Columbia, HSBC Bank Canada CEO Paulo Maia noted that businesses working with Chinese companies can reduce their currency risks and trading costs by closing deals in the Chinese yuan, called the renminbi.
"Some Chinese settlers offer better terms in renminbi," he said. "An HSBC survey found half of Chinese corporates were willing to offer discounts of 3% or more for transactions settled in renminbi."
Those costs could be significant for many of B.C.'s exporters to China. More than $5.8 billion was exported from B.C. to China, accounting for 30% of total Canadian trade with China, up from 19% in 2008.
Maia noted that more than US$400 billion in Chinese trade is already transacted in the Chinese yuan. By 2015, a third of China's overseas trade could be denominated in renminbi, making it one of the top three trading currencies in the world.
B.C. is one of the first governments to borrow money denominated in the Chinese currency. On November 4, over 40 global investors bought into the Province of BC "dim sum bond" in the largest non-Chinese bond issue denominated in renminbi.
"We believe Canada is well positioned to become a renminbi centre for North America and together with the Province of BC, we are pioneering on that space and working hard to make it happen."
