Hong Kong Eyes Global Financial Leadership as China Expands the Yuan's International Role

A bigger role for Hong Kong in China's currency ambitions

Hong Kong handles more than 70 percent of global offshore renminbi payments and holds about 1.1 trillion yuan in deposits, giving the city a central role in China's effort to expand the international use of its currency. As Beijing sets out its 15th Five-Year Plan for 2026-2030, that position is feeding an ambitious forecast: Hong Kong could eventually become the world's leading international financial centre.

Li Yinquan, a veteran financier and deputy to the National People's Congress, described that possibility during China's annual two sessions political gatherings in Beijing. His argument rests on two conditions: China becoming the world's largest economy and a financial powerhouse, and the renminbi gaining a larger share of international currency business.

Li said Hong Kong would benefit if much of the currency held outside mainland China, along with its payment flows and trading activity, became concentrated in the city. Explaining the value of that concentration, he said:

As long as the stock, flow and trading volume are mostly in Hong Kong, this is a very huge benefit for Hong Kong.

Li then set out the conditions behind his forecast:

If China becomes the world's largest economy and a financial powerhouse, the proportion of international renminbi among international currencies rises, and with the growth of the Chinese economy, at that time, Hong Kong may become the number one international financial centre in the world.

Hong Kong's proposed rise is therefore a conditional prospect, with no date given for reaching the top position. The immediate development is more concrete: Beijing wants the city to strengthen its role as the main offshore centre for an increasingly international yuan. Renminbi is the currency's name, while yuan is the unit used to express its value.

How Beijing plans to expand the yuan's reach

China's campaign to internationalize the renminbi has developed over decades. Under the 15th Five-Year Plan, the People's Bank of China is taking a more assertive approach, committing to expand its use in trade, deepen financial market opening in both directions and develop markets for the currency outside mainland China.

Internationalization means more businesses, banks and investors using the renminbi beyond China's borders. A company can pay for goods in yuan, a bank can lend it, and an investor can hold a bond that pays interest in it. Each activity creates demand for services that move, finance or invest the currency.

Hong Kong's role would consequently extend beyond providing access to mainland markets. It would become the main offshore operating centre for this wider network, bringing together payments, borrowing, investment and risk management. Li's forecast depends on the city retaining a large share of those activities as the network grows.

Renminbi trade settlement reached 15 trillion yuan in 2024, an increase of 60 percent from 2022. More than 7 trillion yuan was recorded in the first half of 2025. Trade settlement is the payment that completes a commercial transaction, so these figures describe the currency being used to pay for trade.

Hong Kong can gain business at several stages of that process. Banks may arrange financing before a shipment, handle payment when it is due and help the recipient invest or reuse the proceeds. When those services are concentrated in one place, the resulting pool of money makes it easier to support the next transaction.

The payment network behind the expansion

The Cross-Border Interbank Payment System, known as CIPS, processed 175 trillion yuan, or about $24.7 trillion, in transactions across borders during 2024. That was a 43 percent increase from the previous year. Average annual growth exceeded 40 percent over the preceding five years.

By the third quarter of 2025, 113 institutions in Hong Kong were participating in CIPS, making the city its largest offshore node. The network gives banks infrastructure for handling international renminbi payments and forms an important part of China's effort to build payment channels beyond those centred on the dollar.

CIPS operates within the People's Bank of China's framework. SWIFT, by comparison, has an international board structure and provides financial messaging. CIPS continues to cooperate with SWIFT for messaging involving institutions that are not direct participants, connecting China's payment infrastructure with the wider banking network.

The slogan associated with the CIPS service expresses its ambition to follow the currency wherever it is used:

Wherever there is RMB, there is CIPS service.

Hong Kong also has its own substantial clearing infrastructure. According to SWIFT statistics, more than 70 percent of global offshore renminbi payments pass through the city's clearing systems. Its renminbi Real Time Gross Settlement system handles daily turnover of 2 trillion to 3 trillion yuan.

Real Time Gross Settlement means payments are settled individually as they are processed, instead of waiting to be combined into a later batch. Hong Kong's infrastructure supports services for clearing payments across borders around the clock, launched in 2024, helping connect businesses and banks operating in different time zones.

Deposits, bonds and a deeper pool of money

Hong Kong holds the world's deepest renminbi liquidity pool outside mainland China, with deposits of approximately 1.1 trillion yuan. Liquidity is money that banks and investors can readily use to make payments, provide loans or buy assets. A deeper pool makes it easier to arrange large transactions without constantly finding new funding elsewhere.

The offshore bond market has also expanded. Outstanding dim sum bonds reached 1.27 trillion yuan in the first half of 2025, growing by more than 60 percent over three years. Dim sum bonds are debt issued outside mainland China and denominated in renminbi. Buyers lend money to the issuer and receive payments under the bond's terms.

Deposits, bonds and payments serve different purposes, but together they help explain the city's attraction. Deposits supply readily available funds, bonds give investors somewhere to put those funds, and payment systems move money between users. A business receiving yuan needs practical ways to spend, lend or invest it.

Hong Kong's financial strategy seeks to keep that cycle within the city. More trade payments can generate more deposits and demand for investments. A wider investment market can, in turn, make holding yuan more useful for companies and financial institutions outside mainland China.

Connecting mainland markets with international investors

Hong Kong's market infrastructure links mainland China's controlled financial system with international capital. Its structure gives overseas investors channels into Chinese markets while allowing mainland capital to reach markets abroad under specified arrangements.

Stock Connect began in 2014. The broader Connect network now includes Bond Connect, Wealth Management Connect and Swap Connect, covering securities, investment products and tools for managing financial risk. More than 1,000 international institutions actively participate in these mechanisms.

The arrangements provide designated routes for transactions across the boundary between Hong Kong and mainland China. Recent changes include expanding Southbound Bond Connect to securities firms, fund companies and insurers. Southbound refers to mainland investors accessing the market through Hong Kong; Northbound describes access in the opposite direction.

Authorities are also developing offshore renminbi repo business using bonds held through Northbound Bond Connect as collateral. A repo is a short borrowing arrangement in which securities are sold with an agreement to buy them back later. Using bonds as security can help institutions obtain cash without permanently giving up their investment.

Hong Kong offers international investors a setting outside the mainland's onshore regulatory system, while China's authorities retain controls over the channels linking the two markets. That combination underlies the city's role as both an international marketplace and a controlled route into and out of mainland finance.

New funding facilities target the cost of doing business

The Hong Kong Monetary Authority launched its RMB Trade Financing Liquidity Facility in February 2025, with a size of 100 billion yuan. The facility gives banks stable funding priced with reference to onshore interest rates, supporting their ability to finance trade in renminbi.

An upgraded RMB Business Facility, announced in September 2025, extends funding periods to one year and removes additional charges measured in basis points. A basis point is one hundredth of a percentage point, a unit banks commonly use when describing interest rates and fees.

The upgraded facility also allows banks to lend the funds onward to overseas entities within their own banking groups for direct investment and working capital. Working capital is the money a business needs for routine expenses, such as paying suppliers and keeping operations running.

Both facilities address fragmentation in offshore renminbi funding. Money may be available in one market while a bank or company needs it in another. More dependable funding through Hong Kong can help banks meet that demand and make the city a more attractive place to arrange renminbi financing.

The commercial aim is to encourage international companies trading with China to use Hong Kong's services. Lower funding costs and a broad range of financial products can concentrate activity there, strengthening the city's position as transaction volumes rise.

National planning links finance, commodities and supply chains

The draft 15th Five-Year Plan calls for Hong Kong to strengthen its functions as a global offshore renminbi business hub, an international asset and wealth management centre, and a risk management centre. Asset and wealth management involve looking after investments, while risk management helps businesses handle possible losses from changes in prices, currencies or interest rates.

The national priorities also include accelerating the Northern Metropolis megaproject and developing a commodity trading ecosystem. Chief Executive John Lee Ka-chiu has pledged to align Hong Kong's first local five-year plan with those priorities, coordinating the city's fiscal, regulatory and development work.

The Financial Services and the Treasury Bureau is preparing the inaugural Hong Kong Global Financial and Industry Summit. Its purpose is to bring together global enterprises, funds and technologies, connecting financial services with industrial development.

Commodity trading is a central part of the proposed expansion. Commodities remain overwhelmingly priced in dollars, limiting the renminbi's role in setting international prices. Hong Kong's planned ecosystem would bring together trading, delivery, payment and risk management using renminbi pricing and clearing.

Chinese and international traders could then complete more of a commodity transaction within the offshore yuan market, including managing price risks and settling payments without a dollar intermediary. This would extend the currency's use from paying for goods to pricing and financing them.

Lau Siu-kai, a consultant to the semi-official Chinese Association of Hong Kong and Macau Studies, said Beijing sees Hong Kong as essential to rebuilding international supply chains amid geopolitical tensions. The city's proposed role as a centre for high quality supply chain services would connect trade finance, logistics coordination and payment settlement in a jurisdiction under Chinese sovereignty that operates with international legal standards.

Digital finance and gold broaden the strategy

Hong Kong is also developing digital asset regulation, virtual asset licensing and connections with central bank digital currencies. These initiatives make the city a testing ground for financial activities that mainland China cannot yet implement onshore because of concerns linked to capital controls.

Financial Secretary Paul Chan Mo-po confirmed plans for a second policy statement on virtual asset development, alongside implementation of the Stablecoins Bill from August 2025. Stablecoins are digital tokens designed to keep a steady value relative to a reference asset or currency. The policy programme aims to give Hong Kong a role in setting rules for digital finance.

The Hong Kong Monetary Authority has been preparing a third tranche of tokenized bonds, building on earlier digital bond issues and the Digital Bond Grant Scheme. Tokenization represents an asset, such as a bond, through a digital record, bringing another form of financial infrastructure into the city's markets.

The digital renminbi, or e-CNY, is another part of the strategy. Plans to connect it with Hong Kong's payment infrastructure sit alongside the Mainland-Hong Kong Fast Payment Link, which was expected to launch by the middle of 2025 and provide remittances across the boundary in real time, around the clock.

The Shanghai Gold Exchange's first offshore gold delivery vault in Hong Kong, together with renminbi denominated gold contracts, adds a physical asset to that financial network. It provides infrastructure for gold transactions involving yuan and supports the currency's use as a store of value, meaning something people can hold for later use.

Hong Kong's common law system, English commercial practices and free movement of capital are central to this approach. Under one country, two systems, Beijing can expand financial activity offshore while maintaining macroeconomic controls onshore. The arrangement addresses a recurring concern about the currency's international prospects: China's continuing restrictions on capital movements.

Geopolitical demand meets practical limits

Geopolitical tensions, sanctions and concerns about the use of dollar financial infrastructure as a political tool have encouraged interest in alternative currencies. Emerging markets and economies seeking to diversify reserve holdings provide part of that demand.

The exclusion of major Russian banks from SWIFT in 2022 increased interest in CIPS among institutions seeking payment routes outside Western financial surveillance. CIPS nevertheless continues to use cooperative messaging arrangements with SWIFT for participants that lack a direct connection.

HSBC Hong Kong became a direct CIPS participant in late 2025 after nine years of indirect involvement. David Liao, HSBC's Asia Pacific Co-CEO, attributed the move to demand across the region, describing it as:

growing demand for renminbi trade solutions

ASEAN countries recorded growth of more than 50 percent in transactions across borders using renminbi in 2023. Together with HSBC's move, that figure shows how regional trade demand is contributing to the development of the currency's international services.

Hong Kong still faces practical limits. Offshore renminbi liquidity remains much smaller than dollar liquidity, most CIPS participants are indirect members dependent on SWIFT messaging, and the dollar continues to dominate commodity pricing. The city's opportunity lies in gaining more payments, financing and investment business as renminbi use expands.

The policy timetable shows how that effort has developed:

• 2014: Stock Connect launched, beginning the network of market access arrangements described here.
• 2022: Major Russian banks were excluded from SWIFT, adding to interest in alternative payment channels.
• 2024: CIPS processed 175 trillion yuan, renminbi trade settlement reached 15 trillion yuan, and Hong Kong launched clearing services across borders around the clock.
• February 2025: The Hong Kong Monetary Authority launched its 100 billion yuan trade financing facility.
• First half of 2025: Outstanding dim sum bonds reached 1.27 trillion yuan, while renminbi trade settlement exceeded 7 trillion yuan.
• Middle of 2025: This was the expected launch period for the Mainland-Hong Kong Fast Payment Link.
• August 2025: This was the stated implementation date for the Stablecoins Bill.
• September 2025: The upgraded RMB Business Facility was announced.
• Late 2025: HSBC Hong Kong became a direct CIPS participant.
• March 2026: The two sessions discussions placed Hong Kong's financial role within the 15th Five-Year Plan for 2026-2030.

The Essentials

• Li Yinquan forecast that Hong Kong could become the leading international financial centre if China's economy and the yuan's global role expand sufficiently.
• Hong Kong handles more than 70 percent of offshore renminbi payments and holds about 1.1 trillion yuan in deposits.
• CIPS processed 175 trillion yuan in 2024, up 43 percent, and had 113 participating institutions in Hong Kong by the third quarter of 2025.
• The draft 15th Five-Year Plan supports Hong Kong's roles in offshore renminbi business, wealth management and risk management.
• Funding facilities, market access arrangements, commodity trading, digital finance and gold infrastructure form parts of the expansion strategy.
• Smaller offshore liquidity, dependence on SWIFT messaging among indirect CIPS participants and dollar dominance in commodity pricing remain practical constraints.