Clearing volume surpasses Hong dollar and US dollar! Hong Kong offshore RMB market rises as a global financing hub

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The Hong Kong offshore renminbi market is undergoing a structural leap—from a tool for trade settlement to a global financing hub, marking a new stage in the internationalization of the renminbi.

In June, Hong Kong’s renminbi clearing volume rose to 53.2 trillion yuan (about USD 7.9 trillion), with the settlement scale in Hong Kong surpassing both the Hong Kong dollar and the US dollar, setting a historic record. Meanwhile, offshore renminbi deposits in Hong Kong reached a historic high of 1.13 trillion yuan at the end of May, and bond issuance surged 33% year-on-year.

According to Bloomberg’s report on Thursday, this trend is reshaping the global capital flow landscape. Chinese companies are accelerating overseas expansion, concentrating their treasury management, hedging, and financing activities in Hong Kong; global sovereign institutions and corporates' enthusiasm to issue offshore renminbi bonds via Hong Kong continues to rise; major banks including Standard Chartered, HSBC, and Bank of China (Hong Kong) all say demand for renminbi loans from clients is rapidly expanding, and loan terms are lengthening.

Record clearing volume, RMB settlement scale surpasses HKD and USD

Data from Hong Kong Interbank Clearing Limited shows that Hong Kong's renminbi clearing volume reached 53.2 trillion yuan in June this year, with the total settlement scale in Hong Kong surpassing that of the Hong Kong dollar and US dollar. This milestone breakthrough visually reflects the qualitative shift in the depth and breadth of the offshore RMB market.

Karen Ng, Head of China Opening and RMB Internationalization at Standard Chartered Bank, said, "We are now in a new stage of accelerated RMB internationalization," and the deepening liquidity pool in the offshore market is "truly driving RMB internationalization."

Bosco Wu, strategist at Bank of East Asia, summarized this shift: "We are transitioning from the RMB accumulation phase to the RMB intermediation phase." He pointed out that the core issue in the early stage was how to bring more RMB into the offshore market to build a solid liquidity pool, while the current stage’s core question is how to enable offshore RMB to efficiently flow between mainland China and overseas via balance sheets and capital markets.

Bond issuance and derivatives market expand in tandem, liquidity ecosystem improving

According to Bloomberg-compiled data, global sovereign institutions and corporates have issued RMB 630.3 billion in offshore renminbi bonds so far this year, a 33% increase compared to the same period in 2025. Offshore RMB loans arranged this year so far total around 250 million yuan, while the full year 2025 set a record of 42 billion yuan.

The expansion in bond issuance has simultaneously boosted hedging demand. In Hong Kong, the notional amount of outstanding RMB OTC interest rate derivatives exceeded US dollar derivatives for the first time in October 2025, while the scale of Hong Kong dollar derivatives remained stable.

Bank of China (Hong Kong) said that between February and December 2025, it provided RMB loans and trade financing services to more than 30 companies under the RMB Business Facility at the Hong Kong Monetary Authority. Under the upgraded RMB Business Facility, the maximum single drawdown in December 2025 reached 1 billion yuan, while under the RMB Trade Financing Liquidity Facility in March 2025, the upper limit was only 400 million yuan.

Continuous policy support, Hong Kong expands financing tools to drive market development

Facing strong borrowing demand, the Hong Kong Monetary Authority launched the RMB Business Facility in September last year, providing support to banks with low-cost RMB funds, replacing the RMB Trade Financing Liquidity Facility rolled out in February 2025.

Earlier this month, with over 90% of previous quotas allocated, Hong Kong doubled the scale of the RMB Business Facility to 500 billion yuan. Meanwhile, the quota for the Southbound Bond Connect allowing mainland institutional investors to buy offshore bonds in Hong Kong was also raised to 800 billion yuan.

Hong Kong is also studying a new bidding mechanism for a seven-day offshore RMB liquidity facility and plans to launch short-term RMB debt instruments. These policy adjustments reflect Hong Kong’s strategic intention to strengthen its position as the world’s largest offshore RMB center, amid escalating geopolitical tensions and growing doubts over the US dollar’s dominance.

Interest rate differential fuels borrowing demand, RMB financing attractiveness highlighted

The core logic supporting this market expansion is the significant interest rate differential between China and the US. The RMB Business Facility is linked to the Shanghai Interbank Offered Rate (SHIBOR), with the three-month SHIBOR now about 1.43%, while the US Secured Overnight Financing Rate (SOFR) is about 3.63%, a gap of more than 200 basis points.

Cheuk Wong, Head of Hong Kong Markets and Securities Services at HSBC Holdings, said that with China’s interest rates lower than other major currencies, borrowing in offshore RMB is increasingly favored by the market.

Standard Chartered’s Karen Ng revealed the bank is increasingly channeling RMB funds raised in Hong Kong to clients in Southeast Asia, the Middle East, and Africa, to finance projects related to Chinese supply chains, as well as natural resources, electric vehicles, and manufacturing. She pointed out that this global reach is built on nearly two decades of market openness, relying on mechanisms like the Stock Connect, Bond Connect, and Swap Connect, allowing global investors to trade mainland assets via Hong Kong.

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