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Enoch Yiu

When Wilson Chan Fung-cheung joined Hong Kong’s banking industry as a foreign-exchange trader more than four decades ago, his work involved US dollars, UK pounds, Japanese yen and various European and Asian currencies – but not Chinese yuan.
“Back then, there was no yuan trading at all as, in fact, the internationalisation of the yuan only started in 2009,” recalled Chan, who has worked for various Chinese banks.
Beijing’s decision that year to promote its currency for wider use in trade, investment and other fundraising activities was a game-changer for Hong Kong, which rapidly became an offshore yuan hub, he added.
“Nowadays, the yuan is one of the most used currencies in trade finance worldwide, while many mainland banks and companies have used Hong Kong as a stepping stone to raise funds to develop their businesses internationally,” Chan said.
As Beijing kicks off its next five-year plan this year and refloats President Xi Jinping’s goal of building the country into a “financial superpower”, analysts said Hong Kong could play a critical and unique role – and not just in solidifying the status of the offshore yuan.
Long established as a global financial centre thanks to its common-law system, strong financial infrastructure and abundant talent, the city was also poised to help ramp up digital yuan adoption, connect global investors with mainland listing candidates and serve as a testing ground for cryptocurrency assets, they said.
First declared at a high-level financial policy conference in 2023, Xi elaborated further on his vision of China as a financial superpower in a 2024 speech. Those remarks were recently published by Qiushi, the ruling Communist Party’s leading theoretical journal, indicating the ambitious target has not been forgotten in the run-up to this year’s “two sessions”, the annual meetings of the country’s top legislature and political advisory body.
“Hong Kong can contribute to the country’s ambition to be a financial superpower by being the best international financial centre that we can be,” said Robert Lee Wai-wang, ­a lawmaker and the chairman of Hong Kong-based Grand Finance Group.
To do so, the city should continue building a network of financial institutions with strong talent and proper regulation, enhancing its already robust capital market and launching more products to promote yuan internationalisation, he said.
The push to strengthen the yuan is well-timed, as international investors are cutting reliance on US dollar assets and diversifying into other currencies and asset classes amid geopolitical and trade uncertainties.
Haoxin Mu, economist for sectoral research in Asia at Natixis Corporate and Investment Banking, said Hong Kong was at the forefront of yuan internationalisation.
Hong Kong accounted for nearly 75 per cent of offshore yuan payments as of December, followed by the UK at 7 per cent, according to data from international financial messaging network Swift.


The city also possesses the largest pool of yuan outside mainland China, with about 1 trillion yuan (US$144.9 billion) in yuan bank deposits, although that is still dwarfed by the HK$8.14 trillion (US$1.04 trillion) in Hong Kong dollar deposits.
The Hong Kong Monetary Authority (HKMA) was one of the first institutions of its kind to set up bilateral swap lines with the People’s Bank of China (PBOC), and its line is the biggest worldwide, which Mu said was a key factor in the city’s leadership in various yuan businesses.
Signed in January 2009, the swap agreement allows the PBOC to supply short-term yuan liquidity to Hong Kong lenders for trade finance and yuan loans.
Initially set at 200 billion yuan, it was later expanded to 800 billion yuan – more than double that of a similar arrangement with the Bank of England at 350 billion yuan and the Singapore Monetary Authority at 300 billion yuan, according to data from the central banks.
A further breakthrough came in February last year when the PBOC agreed to allow the HKMA to allocate 100 billion yuan for banks to lend to clients for up to a year.
The facility – doubled to 200 billion yuan this month – provides 40 banks, including Southeast Asian and Middle Eastern lenders, with a cheap and stable source of yuan for loans to global customers. Usage of the facility also expanded from trade finance to other capital investments in December.
Financial Secretary Paul Chan Mo-po mentioned the move in his delivery of Hong Kong’s annual budget on Wednesday, as part of a commitment to align with national priorities and leverage the city’s unique role to advance yuan internationalisation and capital account opening.
Aside from doubling yuan liquidity, Chan pledged to attract high-quality issuers to increase yuan bond issuance in Hong Kong while tapping into emerging markets to bring in more cross-border yuan transactions.
The government would also issue yuan bonds of different tenors on a regular basis to enrich product offerings in the offshore yuan market and promote more convenient foreign exchange quotations and transactions between the yuan and other regional currencies to reduce transaction costs, Chan added.
Also, the government would explore expediting the issuance of mainland government bond futures in Hong Kong, the inclusion of real estate investment trusts under mutual access and the inclusion of a yuan trading counter for southbound trades under the cross-border Stock Connect scheme, he said.


Frank Fang, head of commercial banking for Hong Kong and Macau at HSBC, said the doubling of the yuan facility was a key step that “promotes the wider use of the yuan in the real economy”.
“Clients increasingly view yuan financing not only as a tool for better cost management in the current interest rate environment, but also as a strategic option to support their global operations,” Fang said. “This is particularly evident among Chinese companies pursuing international expansion.”
Meanwhile, PBOC deputy governor Zou Lan said in January that more yuan sovereign bonds would be issued in the city, adding that the PBOC would explore the launch of government bond futures to meet international investors’ demand for a hedging tool for the currency.
To become a true reserve currency, the yuan needed a robust offshore ecosystem for trading, hedging and investment, said Tom Chan Pak-lam, permanent honorary president of the Institute of Securities Dealers.
“Hong Kong’s development of these markets provides the essential tools of swaps, forwards and derivatives for global institutions to confidently hold and use the yuan,” he said.
Last year, issuance of offshore yuan-denominated bonds, commonly known as dim sum bonds, reached 1 trillion yuan, doubling from 2021. Analysts expected the recent strengthening of the yuan to spark more issuance this year.

However, analysts urged the creation of more yuan-denominated products.
“Hong Kong is well-positioned to serve as the hub for offshore yuan financing and transactions,” Mu said. “But one piece that is missing is offshore yuan assets, which leads to stagnation in offshore yuan deposits.”
This was why Beijing sought to promote the city’s dim sum bond market, despite higher funding costs offshore than onshore, he added.
At present, the bonds available in Hong Kong were mainly shorter-term bonds – usually two, three or five years, said Rocky Tung Yat-ngok, executive director of the Financial Services Development Council. The city needed more long-term bonds to attract patient capital, including international pension funds and insurance companies, he said.
Meanwhile, Chan, the former foreign exchange trader who is now an academic at Hong Kong’s City University, said the city had served as a bridge for Chinese financial institutions’ overseas expansion. Industrial and Commercial Bank of China, Haitong International and many brokerages had first set up in Hong Kong before expanding to markets such as Singapore and the UK.
“For the mainland banks, Hong Kong is a natural choice for them as their first step beyond China, as we are part of the country, yet we have the international network,” Chan said.

Hong Kong’s capital market plays a key role in China’s financial development, as companies can raise funds through initial public offerings (IPOs) or bonds to finance their growth, said Robert Lui, who leads Deloitte China’s offering services in southern China.
The Stock Connect scheme, first launched in 2014, links the mainland and Hong Kong stock markets, allowing international investors to trade mainland stocks via Hong Kong-based brokers and giving mainland investors access to Hong Kong stocks.
The cross-border trading scheme began with a Shanghai channel, which was so successful that a Shenzhen leg was added in 2016. Over time, asset classes such as bonds, exchange-traded funds and wealth-management products were added.
In 2025, the Hong Kong stock exchange’s main board reclaimed the crown as the world’s largest IPO market, with 114 IPOs raising US$37.2 billion, according to data from LSEG Data & Analytics. Bourse operator Hong Kong Exchanges and Clearing (HKEX) also introduced several reforms to attract listings by mainland firms.
The resurgence came after two lacklustre years. Hong Kong’s IPO value fell to a 20-year low of US$5.9 billion from 68 listings in 2023, ranking eighth worldwide. In 2024, 64 IPOs raised US$11 billion, placing the city at fifth on the global list.


Meanwhile, mainland companies’ heft in the city’s stock market has grown. As of January, 1,568 mainland firms represented 60 per cent of all listed companies, 79 per cent of market capitalisation and 90 per cent of turnover.
Listing in Hong Kong provided additional value for mainland companies that already had onshore shares, according to Lui. When such firms offered Hong Kong shares, their mainland shares gained 15 per cent and experienced a 28 per cent increase in trading volume on average, he said.
Contemporary Amperex Technology (CATL), the world’s top maker of electric vehicle batteries, was the largest IPO in Hong Kong last year, raising US$5.3 billion, largely to fund a plant in Hungary.
“This showed Hong Kong’s role in supporting mainland enterprises’ global expansion,” Lui said.
The city’s IPO market is also an arena for Chinese banks to flex their muscles against Wall Street’s biggest players like Goldman Sachs, JPMorgan, Morgan Stanley, Citigroup and UBS. Last year, Chinese banks led by Citic, Huatai Securities and China International Capital Corporation occupied seven spots on a list of the city’s top 10 IPO sponsors.
“Hong Kong has attracted many international financial firms as the city is a key capital market to raise funds for mainland companies via stocks and bonds over the past three decades,” said John Lee Chen-kwok, vice-chairman and co-head of Asia coverage at UBS in Hong Kong.
The city is also a popular office location for hedge funds, private equity players and wealthy families from around the world.
Looking ahead, the city needed to attract more listings by international firms, Lee said.
HKEX chairman Carlson Tong Ka-shing shared the view, adding that the exchange would expand its support for mainland Chinese issuers.
“Promoting yuan internationalisation is a strategic priority for HKEX, and we will continue to build a diversified offshore yuan ecosystem across equities, fixed income and currencies,” Tong told the South China Morning Post in a statement.
Analysts and industry participants said digital assets would be another key area of contribution for Hong Kong.
Earlier this year, Beijing tightened regulations on virtual currency trading, expanding a crackdown on cryptocurrencies to the tokenisation of real-world assets. Analysts said the move aimed to curb financial fraud and disorderly capital outflows, while still preserving space for regulated innovation in markets such as Hong Kong.
The city’s securities regulator, the Securities and Futures Commission (SFC), has already issued 12 licences for virtual asset trading platforms, while the HKMA will issue the first batch of stablecoin issuer licences in March.
On February 11, the SFC unveiled several new initiatives aimed at further developing the city’s virtual asset sector while strengthening investor safeguards.
“While mainland China has certain restrictions in place, Hong Kong has robust regulation for digital asset trading and tokenisation, which can attract international investors to trade here,” UBS’s Lee said.

At the same time, Hong Kong is also accelerating China’s financial development through digital currency leadership among central banks.
Project mBridge – a central bank digital currency platform developed by the PBOC, HKMA, the Bank of Thailand and the Central Bank of the United Arab Emirates – processed transactions worth 387.2 billion yuan as of November, with the digital yuan accounting for 95.3 per cent of those payments in value terms, according to the PBOC.
“By integrating e-CNY into local payment systems and piloting wholesale e-HKD in 2026, Hong Kong is strengthening the financial infrastructure to advance the yuan’s status as both a global reserve and a settlement currency,” Deloitte’s Lui said.
But the city faces keen competition as other markets, such as Singapore and the UK, also boost collaboration with Beijing.
“Hong Kong clearly faces pressure as international capital diversifies its exposure, whether to Shanghai directly or to regional peers such as Singapore,” said Gary Ng, a senior economist for Asia-Pacific at Natixis.
Shanghai also figured prominently in Beijing’s plans for financial superpower status, but it was not a case of rivalry with Hong Kong, said Lau Chi-pang, chairman of SD Advocates, an independent think tank promoting sustainable development in Hong Kong.
“This is never a zero-sum race,” Lau said. “As our country is developing a multi-centre financial system with differentiated roles, Hong Kong and Shanghai can surely collaborate and complement each other in unleashing limitless opportunities for our financial development.”
Additional reporting by Sylvia Ma


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From the yuan’s growth as a global currency to IPO funding to tokenisation, the city is a linchpin in Beijing’s ambitions


From the yuan’s growth as a global currency to IPO funding to tokenisation, the city is a linchpin in Beijing’s ambitions.


Why China’s path to ‘financial superpower’ status could begin in Hong Kong

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}From the yuan’s growth as a global currency to IPO funding to tokenisation, the city is a linchpin in Beijing’s ambitions

From the yuan’s growth as a global currency to IPO funding to tokenisation, the city is a linchpin in Beijing’s ambitions