On The Renminbi Offshore Financial Centres Of Hong Kong

The world has been swept by financial internationalization. Supervisors in China have to regulate capital flow because of the conditions of financial market, and this kind of regulation might last for a time. Therefore, the start of offshore finance is an alternative that the financial market makes for internationalization. Offshore financial centers (OFCs) are the outcome of financial liberalization and internationalization. Their appearance is a historic innovation of financial internationalization. Experience indicates that international OFCs not only provide the better place for reallocation of resources, but also improve macro financial arrangement of a country. The purpose of this paper is to provide background information on the business of OFCs and to promote the researches of the Renminbi's OFC, beginning with the evolution of Chinese offshore finance. By means of the basic theories—financial innovation theory and financial integration theory, I contrast the developing mode of different international OFCs, and analyze the reasons and feasibility that Renminbi OFC may locate Hong Kong. Furthermore, I illustrate the relations among Renminbi OFCs and Renminbi's internationalization, exchange rate system, efficiency of host monetary policy. At last, this paper predicts and prospects Renminbi offshore financial operations combining Renminbi exchangeable course.This paper is composed of four parts. The first part is an economic analysis about Renminbi OFC, which involves literature, the theories of offshore finance and the evolution of Renminbi offshore finance operations. In the second part, I introduce the primary OFCs including London OFC, IBF, JOM, Singapore OFC and Caribbean Sea's OFCs. OFCs' characteristics are summed up through analysis and comparison, which are the inspirations for Chinese offshore financial operations. In the third part, I discuss the feasibility of Renminbi OFCs in Hong Kong. This part is organized as follows. Section I describes the current international and national background about expanding offshore financial operations. Section II illustrates how many advantages Hong Kong have, and why Renminbi OFC should be there. And section III discusses the supply and demand of overseas Renminbi market.The forth part is the key part in this paper, which, in detail, discusses how the Renminbi OFC has effect on domestic financial system. Thereafter, I suggest the relevant measures. As the case stands, this part is also the most innovative one of this paper.This paper has definite novelty, foresight and practicability. I investigate profoundly on the basis of collecting and sorting research literatures in existence, for the sake of preciseness. For the first time, I illustrate systematically how Renminbi offshore financial operations influence Chinese financial system, which is embodied in three aspects hereinafter.1,I clarify the correlation between offshore finance and Renminbi internationalization, through using the developing route of international OFCs for reference. Renminbi OFC may open up the scope and depth of domestic financial market, and may make Chinese financial market more developed. This is one of the important basic conditions of Renminbi internationalization. Through the development of OFC, we can introduce some new managements, concepts and innovative financial instruments. The participants in market can learn new knowledge and skills about financial innovations, and the supervisors can also improve managements involved before China can remove exchange rate restrictions. And those help central bank to accumulate experiences. On the other hand, by way of essential infrastructure of Renminbi internationalization and globalization, Renminbi OFC may come into being and develop based on the internationalization. 2,I dissertate how offshore financial operations challenge exchange rate system, through classical Mundell－Fleming model (F-M model). It's possible that to launch Renminbi offshore financial operations might bring speculative a...