A staff member displays the banknotes and coins included in the 2019 edition of the fifth series of the renminbi at an Industial and Commercial Bank of China (ICBC) branch in Beijing, capital of China, Aug. 30, 2019.(Photo: Xinhua)

The People's Bank of China (PBC), the country's central bank, issued 25 billion yuan ($3.64 billion) worth of central bank bills in the Hong Kong Special Administrative Region on Tuesday. The issuance was 2.8 times oversubscribed, showing overseas investors' continued interest in yuan-denominated assets and confidence in Chinese mainland's economic recovery.

Among the issuance, 10 billion yuan worth of central bank bills will mature in three months with an interest rate of 2.40 percent, and the other 15 billion yuan will mature in one year with an interest rate of 2.75 percent, according to a statement released by PBC.

The issuance was well-received by overseas investors. Institutional investors, including banks, central banks, funds, insurance companies and international financial organizations from the US, Europe, Asia and other countries and regions actively participated in the subscription.

The total bidding amount exceeded 70 billion yuan, about 2.8 times the bills issued. It showed that yuan assets are highly attractive to foreign investors, and also reflects global investors' confidence in the Chinese economy, the central bank said.

PBC has gradually established a mechanism for the regular issuance of yuan central bank bills in Hong Kong, which not only enriches yuan investment products and liquidity management tools in the Hong Kong market, but also encourages domestic financial institutions, enterprises and other entities to issue yuan bonds in the offshore market, the PBC said.

South China's Hainan Province issued 5 billion yuan in offshore yuan local government bonds in Hong Kong in October 2022, with the proceeds planned to be invested in the maritime economy, environmental protection, civilian projects and other areas.

Shenzhen in South China's Guangdong Province issued 5 billion yuan of offshore yuan local government bonds in Hong Kong in November.

Hong Kong is the world's largest offshore yuan trading hub, settling roughly 75 percent of global yuan trading outside the Chinese mainland. 

Hong Kong SAR Financial Secretary Paul Chan Mo-po wrote in his blog in June 2022 that "the offshore yuan trading business is a key area that Hong Kong must continue to develop and promote in the future."

From the perspective of international trends, following the continuous expansion of China's economy, the demand for yuan in international trade, investment and reserves will continue to grow. Hong Kong, as an offshore yuan business hub, will play a more critical role," he said.

Global Times