How Hong Kong went from a yuan gateway to a complete currency ecosystem

In September, Chief Executive John Lee Ka-chiu unveiled the city’s first five-year plan along with his policy address, highlighting Hong Kong’s strategic role in promoting the greater use of the yuan outside mainland China as a key priority. In the second part of a four-part series on the globalisation of the yuan, Daisy Wu examines Hong Kong’s evolution from an offshore reservoir into a self-sustaining yuan ecosystem.

Of the hundreds of thousands of people who cross the border between mainland China and Hong Kong every day, many pay with the national currency – the yuan, also known as the renminbi – at turnstiles with the tap of a smartphone.

Yet once that currency passes over the same border and into a Hong Kong bank account, it is treated differently from the renminbi on the mainland. As offshore yuan, or CNH, it falls outside mainland China’s capital controls and trades at a market-driven exchange rate, like the US dollar, the British pound and the Japanese yen.