In March this year New Zealand signed a CNY/NZD direct convertibility agreement with China, which will further facilitate trade and investment flows between the two countries by simplifying foreign exchange transactions and ultimately reducing costs.
Anecdotal evidence from our clients strongly suggests that the yuan is rapidly expanding its role, spurred by China's growing domestic demand and key position at the heart of global supply chains.
Earlier this year, HSBC asked the market research company Nielsen to canvass more than 1,300 companies that do business with China. A number of data points stand out.
More than three-quarters of the companies surveyed that use the yuan said it had given them both financial and business relationship benefits. It is getting easier and cheaper to access RMB products, and for corporates with both operations and sales in China, using the yuan can reduce the level and cost of currency risk. And although many Chinese companies are completely at ease transacting in foreign currencies, an overseas client or supplier's willingness to shift to renminbi settlement is frequently seen as a sign of commitment.
The move into the yuan is being led by larger corporations: 42 per cent of the respondents with turnover of more than $500m said they carried out at least some of their operations in RMB, compared to only 15 per cent of those with turnover of between $3-5 million.
That split is at least in part because the larger the company and the broader its reach, the easier it is to reap the benefits of the increasingly sophisticated cross-border payments and cash management solutions - sweeping, netting and pooling for example - that are becoming possible as the People's Bank of China progressively streamlines the regulatory architecture.
China is still the world's most dynamic major economy, and RMB users surveyed seem to be more optimistic about tapping into that growth. 69 per cent of RMB users expect to increase their cross-border business with China over the next 12 months, compared with 56 per cent of non-RMB users.
The survey results indicate that the extraordinary growth of renminbi usage is likely to be a long-term phenomenon.
59 per cent of companies that already use renminbi forecast that their cross-border use of the yuan would increase, and a third of the non-users said they intend to start using the currency within the next five years.
The market has ample room for expansion: only 22 per cent of the companies surveyed said they currently use RMB, and just 18 per cent of China's cross border trade was settled in RMB in 2013, but that is up from 3 per cent in 2010.
It seems we might be approaching some kind of inflection point. In the survey, 47 per cent of companies that used RMB said they expected that the currency would become an international trading currency used to settle invoices in international deals that do not involve China at all, much as the US dollar is used today.
The yuan is changing. The survey results indicate that what was once a niche currency has gone mainstream, and the early adopters are not only enjoying financial benefits, they are also using RMB to build strong relationships within China and seeing their business grow as a result.
HSBC commissioned an independent research agency to survey businesses which are either based in mainland China or do business there on their views on renminbi. Nielsen interviewed 1,304 businesses based in 11 key markets - China, Hong Kong, Taiwan, Singapore, Australia, UK, US, Germany, France, Canada and the United Arab Emirates - between 3 April and 7 May 2014. Error margins vary according to response size.
