The Canadian Chamber of Commerce issued a report entitled Doing More Business with China: Why Canada Needs a Renminbi Hub.
Over the past decade, China has become Canada’s second largest and fastest growing trading partner, with exports quadrupling from $5 billion to $20 billion and imports nearly tripling from $18.6 billion to $52 billion. In fact, in 2013, China surpassed the United States to become the world’s biggest trading nation, with imports and exports totaling $4 trillion. China’s currency, the renminbi, is also the world’s fastest growing currency, and the Chinese government is keen to liberalize the renminbi and ensure an increasing share of trade flows is denominated in the currency. With these factors in play, now is a prime opportunity for Canada to cement its commercial and diplomatic relations with the country that will one day become the world’s largest economy. It is time to establish a renminbi trading hub in Canada.
A renminbi trading hub is a centre that is authorized by China’s central bank to complete renminbi transactions, with the financial infrastructure for settlement and clearing and with sufficient liquidity to handle large transactions at a stable and predictable exchange rate.
In the report, they examine the benefits a renminbi trading hub would have on the Canadian economy. They estimate the benefits could be enormous: more than $30 billion in direct trade benefits, a more competitive financial sector, more investment in Canada and solidified commercial and diplomatic relations with the country that will soon be the world’s largest economy.