Swan chases bigger role in renminbi conversion

THE Treasurer, Wayne Swan, is expected to promote Australia's role in the internationalisation of the Chinese renminbi as he kicks off a visit to Hong Kong on Saturday.

THE Treasurer, Wayne Swan, is expected to promote Australia's role in the internationalisation of the Chinese renminbi as he kicks off a visit to Hong Kong on Saturday.

The visit builds on a previous trip to Hong Kong last July, where Mr Swan established a joint Australia-Hong Kong renminbi trade dialogue. He also tested the waters over whether Australia could become just the third country allowed to directly convert its currency to the renminbi, also known as the yuan.

Mr Swan said the international convertibility of the Chinese currency would become increasingly important as the weight of global economic activity shifted towards Asia.

"As the gateway to China and the largest offshore renminbi market in the world, Hong Kong is an ideal place to discuss renminbi internationalisation," Mr Swan said.

"I will reinforce Australia's keen interest in promoting greater use of the renminbi for international trade and finance, with the renminbi increasingly important in the Asian century as the weight of global economic activity shifts from West to East."

Direct convertibility will benefit Australian miners and other companies that do business with China by lowering transaction costs.

China has signalled that it will continue to open up its capital markets, including by allowing greater access to foreign investors. Chinese analysts believe that the renminbi will become a fully convertible currency to accelerate the opening of China's capital account.

The global bank HSBC has tipped the Chinese government will make the currency fully convertible within the next five years.

On Monday, Mr Swan will speak at the Asian Financial Forum, which brings together members of the global financial and business community to discuss economic trends in Asia.

"At the forum, I will continue to stress the importance of strengthening and developing closer financial integration within the region and the benefits this will bring," he said.

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