Hong Kong gradually accepts RMB

The RMB was born into hard times, as the newly founded People's Republic of China was faced with a collapsed economy. The RMB was a cheap currency on the foreign exchange market, 42000 yuan could be exchanged for just one US dollar in 1950. That's one reason the yuan was not accepted in Hong Kong at that time. But the picture is different today. CCTV reporters have surveyed businesses in the Special Administrative Region to learn about the changes.

This is the North Cape in downtown Hong Kong. At most of the retail shops on the street, there are signs clearly welcoming the RMB. Sun Weiguang, a 30-year old Hong Kong SAR native, owns a dried seafood store. He receives between one-thousand and two-thousand yuan from his customers everyday.

Sun Weiguang, Shop owner said "Previously, we did not accept RMB. It was only after 2005 that we allowed payments in yuan."

The move came after the 2003 introduction of the individual traveler scheme on the Chinese mainland. In the following years, the mainland has become the biggest source of tourists to Hong Kong, accounting for over half of Hong Kong's travel market. Exchange outlets initially cashed in on the opportunity. Shop owners then began to willingly take RMB notes to attract mainland customers. In January 2007, the RMB exchange rate against the US dollar surpassed that of the Hong Kong dollar for the first time. This historic moment lead to a psychological turnaround in Hong Kong.

Sun Weiguang said "The RMB is quite safe now. Most of the shops accept yuan payments, except for small businesses like newspaper stands. After receiving RMB, we save it in the bank."

Also booming are yuan-related financial services at local banks. In 2004, branches began taking RMB deposits from individuals after 15 years of service-suspension. By the end of 2008, local banks held more than 50 billion yuan in deposits. It is only possible to extend their RMB business, however, by Hong Kong becoming an offshore yuan market. 2009 witnessed some breakthroughs.

Diversified yuan investment tools are available in Hong Kong. Starting in 2007, mainland banks sold 35 billion yuan-denominated bonds. This September, the local government joined the run by issuing 6 billion yuan treasury bonds in the SAR. The RMB, representing a promising economic entity, has now become a popular choice in the property portfolios of Hong Kong residents.

Sun Weiguang said "China is getting stronger, and so is its currency. This is good for every one of us."

Ba Shu-Song, Director of SDC Finance Research Center said "My experience in Hong Kong showed me how the RMB gained weight through the years. In 1997 and 1998, few shops there accepted RMB. The yuan was weaker than the Hong Kong dollar. But in the last two years, yuan are widely accepted in Hong Kong, including RMB credit cards. RMB-denominated bonds are also available in Hong Kong. Indeed, originally a domestic payment certificate, the yuan has now grown into a heavyweight currency, at least in the Asian region. It comes along with China's growth in the past 60 years."