RMB gets wider use across region
By Zhang Dingmin and Liu Jie (China Daily)
Updated: 2006-01-27 06:39

With the coming of the biggest Chinese holiday season, more and more people are at the airports, carrying big bags on flights to the warm places in Southeast Asia.

They are Chinese tourists.

Overseas travels by Chinese and their spending are the major source for the overseas circulation of renminbi, China's currency, according to Li Jing, who teaches finance at the Capital University of Economics and Business.

Figures released earlier this week by the National Bureau of Statistics indicate that, last year alone, as much as 620 billion yuan (US$75 billion) could have been spent overseas.

In 2004, a central government report said that more than 770 billion yuan (US$95 billion) flowed into and out of the Chinese mainland through tourist spending and border trade.

How many renminbi will flow out of China during the Spring Festival holidays, which technically start at midnight Saturday, is still hard to tell. But many Beijing-based overseas travel services told China Daily that they were witnessing a large growth in Chinese tours to Southeast Asia.

Li Shuang, sales manager of China Women's Travel Service, added Australia to its list of most favoured destinations of Chinese travellers.

A combination of strong growth in tourism spending and flourishing border trade will bring even more renminbi to the countries across China's southern border.

In the meantime, Hong Kong has strengthened its role as China's offshore renminbi processing centre.

According to Shenzhen customs figures, the value of renminbi cash that was transported from the mainland to Hong Kong in 2005 totalled 2.65 billion yuan (US$327 million), an increase of 365 per cent year on year. By comparison, 990 million yuan (US$122 million) was transported from Hong Kong to the mainland.

Considering the huge amount of tourism spending that Hong Kong can receive from the mainland at the same time, the trend indicates that more companies are using renminbi for business in Hong Kong.

They may have found Hong Kong's renminbi exchange services more convenient than those on the mainland. They may even be anticipating a further revaluation, said Li Jing.

Although in theory the renminbi's circulation is still restricted to within the mainland, it has been used in border trade and on private trips for a long time. The money is being used in all of China's neighbours and quite widely in Laos and Mongolia.

How many renminbi are involved in border trade is hard to calculate. But even if illegal business is not taken into account, tourism spending is the biggest outflow channel, Li Jing said.

2005 was certainly a year when China's tourism spending boomed after the government decided at the beginning of the year to raise the limit on the amount of the currency Chinese tourists were allowed to carry overseas to 20,000 yuan (US$2,470) per person, compared with only 6,000 yuan (US$740) set by a 1993 regulation.

Last year, 31 million Chinese took overseas tours, of whom 25 million were on personal holidays. If each person carried 20,000 yuan, it means a total of 620 billion yuan (US$76.5 billion).

For the last couple of years, Chinese financial experts have been talking about the renminbi's inevitable "internationalization." However they may define the word, Chinese banking cards are certainly becoming increasingly recognized abroad.

In 2004, the most popular brand of Chinese debit card, UnionPay, became accepted in Hong Kong and Macao.

The card management company claims to have issued 820 million cards, and current policy allows each UnionPay cardholder to withdraw no more than 5,000 yuan (US$617) worth of foreign currencies.

Since then, the company has signed agreements with many countries in Southeast Asia and the rest of the world and markets itself using the slogan "Anywhere Chinese go."

Anywhere indeed.