Budget 2025: Improved financial connectivity to boost Hong Kong’s role as RMB trading hub

Financial Secretary Paul Chan Mo-po has proposed  to enhance Hong Kong’s position as a Renminbi trading hub.

The People’s Bank of China and the Hong Kong Monetary Authority will start working together to provide “round-the-clock” and “real-time” small-value cross-boundary remittance services for residents of Hong Kong and the mainland as soon as the middle of this year.

“The HKMA will launch an RMB Trade Financing Liquidity Facility for banks as a stable source of relatively lower-cost funds to support banks in providing RMB trade finance services to their corporate customers. The new facility has a total size of 100 billion yuan,” Chan said.

According to a report from the Society for Worldwide Interbank Financial Telecommunication, the value of RMB payments increased 2.1% compared to December 2024. Hong Kong handled 78.67% of RMB payments excluding the mainland. 

Inconvenient renminbi remittance service has been problematic for mainland residents and Hongkongers alike.  XiXi Chen, 23, is a mainland student at the University of Hong Kong.

“The driver pulled me out because I did not have any cash. It is quite embarrassing,” said Chen. “ I am happy that the government will implement the remittance service so that I will not have to wait for payment.”

Cory Choi, 22, a Hongkonger who worked at American International Assurance said before COVID-19, shopping and consumption in the mainland was quite inconvenient.

“I was accustomed to bringing a lot of cash. When I tried to pay, the shops told me they did not have change for me,” said Choi.

“But since last year, I found I could go to the mainland to shop by just bringing my phone and my Home Return Permit. The e-payment methods in Hong Kong can also be used in the mainland,” Choi added.

According to WeChat Pay Hong Kong, more than 3.64 million of Hong Kong residents have used the service in the mainland. The number of bills that are paid in HKD doubled, and the number of young users who use the HKD payment method increased by 145%.

Leo Wong is a 29-year-old Bank Manager at HSBC.  HSBC adapts to the demands and regulatory changes of the Hong Kong and mainland markets through a diversified payment method, reliance on SWIFT for international settlements, compliant RMB transfer services, and connections to Alipay and WeChat Pay.”

“Because of the prosperity of cross-border consumption, the market is becoming keener on Renminbi, but the effort of HKMA collaborates with Alipay as well,” Wong said. “WPHK HSBC headquarters in Hong Kong simplify the currency exchange procedure, facilitating interoperability payment in two places.”

HKMA published a series of measures on Jan. 13,  aimed at improving the financial connectivity between Hong Kong and the mainland. They include faster payment systems between the mainland and Hong Kong.

Wong said proposals announced in the budget today will enhance cross-border spendings. 

“The interconnection of the Greater Bay Area will help attract more capital flow to the stock markets and other financial services between Hong Kong and the mainland,” Wong said.

Wong Kin-ming, Professor of the Department of Accountancy, Economics, and Finance at Hong Kong Baptist University, said the improved financial connectivity will attract more RMB capital to the Hong Kong stock market, and the strong bond between HKD and RMB can offer more liquidity for both economies.