appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

hooksArticlePageFloatingButtonConfigArticle

appConfig

filter

json

liveArticle

Ralph Jennings

Christina Zhao

Expanding use of the Chinese yuan in fast-growing Central Asia, where China is a top investor, can reduce risks and costs for infrastructure firms, part of a broader trend that sees the currency gaining ground wherever commercial flows create demand for it, according to speakers on an investment panel in Hong Kong on Thursday.
Smoother access to the yuan would lower risks inherent in currency exchanges, particularly when the more internationalised US dollar is trending strong, and bring down the costs of exporting equipment from China, speakers said during a discussion on yuan internationalisation at the Belt and Road Summit.
“The internationalisation of the renminbi is particularly important to us because most of our equipment is manufactured in China and shipped over,” said Long Jisheng, chairman and CEO of the Shanghai-based waste management firm SUS Environment.
In the infrastructure industry, where margins are razor-thin, exchange-rate fluctuations could wipe out profits entirely, he noted. To resolve this, Long said that Chinese enterprises needed a closed-loop financial system fully denominated in yuan, spanning investment, financing, procurement and returns.
This financial strategy is becoming increasingly critical in the five-country Central Asian region, which has captured global attention in recent years because of untapped mineral resources. According to the Yorktown Institute, more than 11,000 enterprises with Chinese capital operate there. SUS is one of them.
“Many of these countries are small, and it’s difficult to achieve complete domestic production there due to their limited scale,” Long said. “Therefore, internationalisation allows us to reduce our financing costs and mitigate exchange-rate risks. We are very much looking forward to this.”
Panellists pointed to use of the yuan in Southeast Asia and Africa as proof the Chinese currency, though unconvertible in much of the world, had a role where there was demand.
“How the adoption develops really depends on the corridor and reflects commercial flows,” said Karen Ng, global head of yuan engagement with Standard Chartered.
“For example, in Southeast Asia, adoption is largely driven by the supply chain, manufacturing and procurement needs, [while] in the Middle East and parts of Africa … commodities, energy and infrastructure also provide the practical entry points.”
Hong Kong, Singapore and the United Arab Emirates are now among the top offshore spots today for circulating the yuan.
The most successful yuan internationalisation “models” around the world hinged on actual commercial flows, expansion beyond a single transaction method and local and international “connectivity”, Ng said.

Looking ahead, Long predicted the “biggest catalyst” for wider yuan adoption in Central Asia would be successful benchmark infrastructure projects. Managing a project’s “full life-cycle” with stable returns would boost local regulators’ confidence, transitioning the currency’s use from “isolated cases to normalised development”, he said.
Kazakhstan, a key partner in China’s Belt and Road Initiative, also sees growing demand for the currency. Timur Onzhanov, deputy management board chairman of Baiterek National Investment Holding – a state-owned body supporting Kazakhstan’s economic growth – said that local companies shifting towards exporting “processed goods” needed “sophisticated renminbi settlement trades”.
He urged better connectivity between Chinese and Kazakh financial platforms, suggesting that investors should have access to suitable equity and insurance products, and that overall export support should be strengthened.
“It’s time to connect these platforms and also help them to enable a suitable financial means between China and Kazakhstan,” he said.
Several large Chinese banks operate in Kazakhstan, the largest Central Asian country by population and land area. In June, a 70-person delegation from Hong Kong and mainland China to Kazakhstan and Uzbekistan generated 96 deals worth US$1.65 billion.


Hong Kong targets gold trading, FPS-UnionPay link to boost yuan use

14 key takeaways from John Lee’s policy address, Hong Kong’s first 5-year plan

Brics keeps de-dollarisation push alive despite no common currency plan: analysts

China, Kazakhstan plan QR payments, expanding yuan’s reach in overseas retail purchases

Yuan

Investment surge in Central Asia drives calls for expanded use of Chinese yuan

Use of the yuan in Southeast Asia and Africa proves the currency has a role where there is demand, according to speakers at a summit in Hong Kong on Thursday. Photo: Reuters

Karen Ng, global head of yuan engagement with Standard Chartered. Photo: Enoch Yiu

How Chinese investment is driving Central Asia’s green energy boom

For now, Central Asia relies heavily on natural gas but increasingly large sums are being spent on developing sources of clean energy. Photo: AP

The Beijing headquarters of the Asian Infrastructure Investment Bank, which has heavily invested in renewable energy projects in Central Asia. Photo: Xinhua

Kazakhstan’s 100MW Zhanatas Wind Power Plant is not the end of Uzbekistan’s green energy drive. Photo: AIIB

The decommissioned Mangystau nuclear power plant in western Kazakhstan. Photo: Shutterstock

Deutsche Bank sees supply chains driving yuan’s rise in global trade

Growing cross-border trade and more flexible supply chains are driving wider use of the yuan, even as the US dollar retains its dominant role in global payments. Photo: dpa

Hong Kong to propel belt and road market expansion, finance chief says

Hong Kong will host 11th Belt and Road Summit this week, an annual event that promotes business among participating nations. Photo: Kit Lai

Financial Secretary Paul Chan says Hong Kong serves as a pivotal hub and platform for accelerated development and deepened exchanges. Photo: Nora Tam

How can Hong Kong, Central Asia build momentum on growing ties and go beyond MOUs?

Kazakhstan’s capital, Astana. Photo: Getty Images

Commissioner for Belt and Road Nicholas Ho. Photo: Jonathan Wong

Kazakhstan’s privatisation push offers new IPO opportunities for Hong Kong

Raygorodok gold mine in northern Kazakhstan.  The operation is a rare example in Central Asia of a long-standing private mining venture. Photo: SCMP

Hong Kong Chief Executive John Lee Ka-chiu during his visit to Nazarbayev University in Astana, Kazakhstan, in June. Photo: ISD

A drone view of Almaty in Kazakhstan. Photo: Reuters

Economy

Business

Banking & Finance

Use of the currency can cut risks and costs for infrastructure firms active in the mineral-rich region, according to speakers on an investment panel


Use of the currency can cut risks and costs for infrastructure firms active in the mineral-rich region, according to speakers on an investment panel.


Investment surge in Central Asia drives calls for expanded use of Chinese yuan

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Use of the currency can cut risks and costs for infrastructure firms active in the mineral-rich region, according to speakers on an investment panel

Use of the currency can cut risks and costs for infrastructure firms active in the mineral-rich region, according to speakers on an investment panel