The Number Of US Firms Willing To Trade in Chinese Yuan Has Tripled This Year

Tyler Durden's picture




 

As the US spreads its message of cheer around the world, it appears an increasing number of trade 'partners' are more than willing to consider alternatives to the hegemony. As AFP reports, China's Yuan usage in global trade and finance has more than doubled this year. While still notably below USD usage in international payments it remains firmly in second place for trade finance and according to a recent survey by HSBC, the number of US companies planning to use Yuan has almost tripled this year (from 8% to 22%). De-dollarization continues...

 

As AFP reports,

China's yuan is a growing force in global finance, more than doubling in use over the past year, according to a new study from the Institute of International Finance Thursday.

 

That jump moved it ahead of the Hong Kong and Singapore dollars and even with the Swiss franc, the sixth most used currency in global transactions, the IIF study said.

 

In trade finance, overwhelmingly dominated by the US dollar, the yuan jumped into second place last year ahead of the euro and the Japanese yen, comprising eight percent of transactions.

 

And despite Beijing's still firm controls on its use, the yuan has become the ninth most-traded currency on foreign exchange markets, the volume hitting US$120 billion daily on average, compared with US$34 billion in 2010.

 

The study by the IIF, a global association of leading banks, said the gains have come as Beijing slowly frees up the currency for international use.

 

There are clearing banks for yuan transactions now in five international centres: Hong Kong, Macau, Taiwan, Singapore and, since early this year, London, the world's leading foreign exchange centre.

 

...

 

"While true internationalisation would require much greater capital account liberalisation, the Chinese government continues to take measured steps towards opening China's financial markets." "Further gradual steps to widen the currency trading band -and a more market-determined exchange rate - will help this process," the IIF said.

But it seems the world is warming increasinmgly to using the Chinese currrency...

Survey shows 17% of U.S. cos. used yuan to settle trade this yr, up from 9% last yr, HSBC says in statement.

Global average yuan usage was 22%, according to HSBC, which surveyed business leaders in 11 countries

26% of French cos. used yuan, the most outside China, Hong Kong and Taiwan, followed by 23% in Germany

Especially the US!!

22% of U.S. cos. said they aren’t using yuan but plan to do so within the next 6 mos. to 5 yrs, up from 8% a yr ago.

*  *  *

Even US firms are de-dollarizing?

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Fri, 07/11/2014 - 14:46 | 4947876 SoilMyselfRotten
SoilMyselfRotten's picture

Et tu?

 

Fri, 07/11/2014 - 15:01 | 4947918 Pladizow
Pladizow's picture

“The greatest shortcoming of the human race is our inability to understand the exponential function.” - Albert Bartlett

Starting with a domino 5 millimeters tall and increasing each successive domino by 150%, the 29th domino will be large enough to topple the Empire State Building.

Who invented death by a thousand cuts?

Fri, 07/11/2014 - 15:04 | 4947944 p00k1e
p00k1e's picture

I tell casino goers something similar… for the Roulette Wheel. 

All ya have to do is start with a dollar and double your money 30 times in a row, you’ll be good.

1 x 1 = 2
2 x 2 = 4
2 x 4 = 8
16
32
64
$128
And so on….

Fri, 07/11/2014 - 15:11 | 4947961 idea_hamster
idea_hamster's picture

Capitulation = the top.

Once everyone accepts the RMB, it will implode.  Spectacularly.

<gets popcorn>

Fri, 07/11/2014 - 16:18 | 4948197 earleflorida
earleflorida's picture

'as the great king granted his favorite alchemist with one request, it was all for a modest and measely grain of wheat to be doubled every day-- the king laughed, saying surely you jest...?'

Fri, 07/11/2014 - 18:29 | 4948545 James_Cole
James_Cole's picture

according to a recent survey by HSBC, the number of US companies planning to use Yuan has almost tripled this year (from 8% to 22%). De-dollarization continues...

And on the other hand everyone in china with money is moving it out of the country as fast as possible...

http://www.scmp.com/business/banking-finance/article/1552389/fears-tough...

According to the Hurun Report's survey of China's richest people, the percentage of super-rich individuals wanting to emigrate, or who had already done so, hit 64 per cent this year, up from 60 per cent last year.

Fri, 07/11/2014 - 18:31 | 4948555 James_Cole
James_Cole's picture

1 x 1 = 2

Not sure this math is entirely correct.

Fri, 07/11/2014 - 18:52 | 4948610 The Alarmist
The Alarmist's picture

You'll never get anywhere with that attitude! 

1x1=2 by virtue of the synergies that are not taken into account in traditional mathematics.

Fri, 07/11/2014 - 14:52 | 4947902 SMG
SMG's picture

All large corporations around the world are controlled by the Globalist Oligarchy.   They could care less about the counties they are based in.

Fri, 07/11/2014 - 14:55 | 4947909 Kaiser Sousa
Kaiser Sousa's picture

remove the word "Willing" and replace it with "FORCED" and you have the headline for the next century....

 

"he who owns the Gold makes the rules..."

 

Fri, 07/11/2014 - 14:57 | 4947916 NoDebt
NoDebt's picture

They they should be about read to let the currency float in the open market instead of tight-pegging to the dollar.  This is me beginning to hold my breath.

Fri, 07/11/2014 - 14:59 | 4947919 TalkToLind
TalkToLind's picture

--> What is a Yuan?

--> What is a Lebron James? 

Fri, 07/11/2014 - 15:00 | 4947928 laomei
laomei's picture

Make sense, I stopped billing in USD 4 years back regardless of client and region.  

Fri, 07/11/2014 - 15:01 | 4947933 p00k1e
p00k1e's picture

So ya got a pocket full of Yuan….  Detroit Hookers still won’t take that as payment.  One must convert to dollars first, at a cost of course.

We wait for Walmart to accept the Yuan at their U-Scan….

Fri, 07/11/2014 - 15:20 | 4947981 headhunt
headhunt's picture

Have you tried to pay with Yuan?

Fri, 07/11/2014 - 15:39 | 4948037 p00k1e
p00k1e's picture

Not exactly Yuan, but Canadian currency.  LOL 

No deals! 

Fri, 07/11/2014 - 15:18 | 4947975 headhunt
headhunt's picture

Everyone eager to switch and get rid of the bloody dollar ... until the Yuan plug stops working.

One of the side effects of using currency as de facto fiat for payments the markets will force the actual value of the currency and a peg is no more. It would happen overnight - big down side for China in that scenario.

Fri, 07/11/2014 - 15:33 | 4948014 pakled
pakled's picture

Elaborate please.

Fri, 07/11/2014 - 15:23 | 4947987 arby63
arby63's picture

Our parasitic relationship with China is undeniable.

The poorer we get, the poorer they get. No other scenario works.

Thus, the yuan may gain ground but the option to overtake right now is miniscule.

Fri, 07/11/2014 - 15:39 | 4948024 Dubaibanker
Dubaibanker's picture

Since China does trade by exports of over USD 2 trillion pa and have started emphasing settlement in yuan, therefore, we all need yuan and they have created real demand of the renminbi. USA had to reach agreements with Saudi and all to deal oil in dollars and by ending the gold standard. However, China is just asking buyers to pay in yuan without reaching any major arm twisting or shady agreements.

Just watch this to project the China's economic power over the coming decades: http://www.dailykos.com/story/2014/06/13/1306854/-China-has-consumed-mor...

The volume of cars sold in China is as follows: http://www.gbm.scotiabank.com/English/bns_econ/bns_auto.pdf

Until 1999: 0.43m

Average 2000- 2010: 4.51m

By 2011: 12.16m

By 2012: 13.18m

By 2013: Beaten America's total volume of 15.53m...China now at 16.30m

By end 2014: forecast of car sales 16.00m in US while China will keep rising to 18.36m

US was 14.55m in 1999 and today is 16m. Growth of 9.96% in 15 years.

China was 0.43m in 1999 and is 18.36m cars sold now in 2014. GROWTH OF 4,169.77% in 15 years!

I rest my case.

The rise of China is underpinned by their rising currency demand, both for trade as well as deposits/investments, again at a massive speed. https://www.dbs.com/id/treasures/aics/GenericArticle.page?dcrPath=templa...

From zero in 2009, today more than CNH 700bn / USD 113bn of bonds are held by foreigners. Trade settlement is rising at a speed of 1,000% since 2013, admittedly from a very small base but has reached from No 13 last year to No 7 in 2014. This shows demand regardless of what Bank of America may be projecting.

Just in HK, the deposits held by foreigners has gone from zero in 2009 to near CNH 1 trillion which is over USD 161bn. Now many more cities such as Singapore, Taiwan, London, Frankfurt, Luxembourg are also added in 2014 to hold deposits, have bonds and do renminbi settlement. More financial cities such as Dubai, Toronto etc will be added soon. You may note that USA is absent from any global cities executing settlement of yuan. This clearly indicates the Chinese policy and their power over USA and their negotiating capability. USA cannot be seen clamouring for settlement of renminbi in US. But one day it will need to happen, if the American buyers need to import from China which is a necessity and not an option.

The Secy of State and Secy of Treasury are in China trying to make a deal. One of the only countries the American top politicians have to visit is China, nowhere else. Everyone else has to visit USA. This shows the massive sway China has over the US.

The demand of Chinese renminbi has just begun. USA is pretty much the last one to join the party...tch tch...better late than never.

Fri, 07/11/2014 - 17:11 | 4948347 Peanut Butter E...
Peanut Butter Engineer's picture

It's already happening about four years ago our suppliers in China indicate they want settlement to be in yuan, they lost about 2% per year in our USD to yuan conversion because of quantitative easing by the time we paid out invoice, A year after that they request all invoice be paid in yuan the or we cannot purchase from them and that's what's having to almost all of our suppliers from China.

Good thing is our company decided to convert of usd to yuan in Chinese bank and kept it in there for couple months before paying invoice and gaining us 4-5% in interest!

Fri, 07/11/2014 - 16:18 | 4948204 orangegeek
orangegeek's picture

Europe is the largest economy, US is the second largest economy - and until this changes, these currencies will carry the largest influence.

 

China is a financially polarized world - the communists like it that way.

Fri, 07/11/2014 - 17:54 | 4948475 Lea
Lea's picture

orangegeek, you're sorely underestimating the shrewdness, patience and will-power of the Chinese. Once in motion, these guys are steamrollers.

Fri, 07/11/2014 - 17:58 | 4948485 NuYawkFrankie
NuYawkFrankie's picture

And in other Breaking News - the number of Americans willing to at least try Yuan-Ton soup has  almost quadrupled

Fri, 07/11/2014 - 18:57 | 4948623 The Alarmist
The Alarmist's picture

Had a colleague ask me today if a new contract should include an OFAC clause.  My response was that it would be appropriate if a transaction would possibly be denominated in USD at any point along the way between payor and payee or pass through or to a US "person."

You can see where all of this is going ... are we surprised that even US companies are looking for ways to lose their citizenship?  Dealing in Yuan is a first step.

Sat, 07/12/2014 - 12:57 | 4950000 user2011
user2011's picture

Many companies are making profits in China.  Their sales and growth are from developing world and Asia.  So, they should have a lot of money in Asian Banks and local currencies.    They won't bring back the money because of tax.  So, they may just well using those currencies.  

It gives me a hunch that  80% of the companies surveyed is not doing well in Asian market.

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