European companies have long used the Hong Kong Special Administrative Region (SAR) as a base for China-related business within a financial system open to international capital. At least 1,770 European Union (EU) companies were active in the SAR in 2025, around 850 of them through regional headquarters or offices. Hong Kong’s offshore renminbi (RMB) banking market dates back to February 2004, when banks first began offering RMB deposit, exchange and remittance services. It subsequently expanded into bond issuance from 2007 and cross-border trade settlement from 2009, establishing a platform for banks and companies outside mainland China to hold, raise and settle the Chinese currency. This gateway function increasingly operates in both directions, facilitating international investment into mainland China while also enabling Chinese companies to access offshore capital markets and manage their overseas financial activities. Recent measures go beyond payments, affecting how RMB positions are funded, hedged and used as collateral. The city’s gold-market build-out extends that strategy into physical commodity infrastructure.
The scale of international RMB use depends heavily on what is being measured. Swift generally puts the currency at around 3% of global payments during 2026, whereas People’s Bank of China (PBoC) Governor Pan Gongsheng has put the share at around 6-7% when transactions through the Cross-Border Interbank Payment System (CIPS) and banks’ internal settlement networks are included. The figures cover different sets of transactions rather than competing estimates of the same activity. ECB data show a different picture in trade finance: by March 2026 the RMB accounted for around 8% of Swift trade-finance messages, compared with roughly 6% for the euro. The broader payment estimate suggests that RMB use extends beyond Swift’s reporting coverage, while its higher share in trade finance reflects its stronger position in specialised banking transactions, particularly those linked to Asian trade. For European firms, this points to growing opportunities for RMB financing in China-related business rather than a general displacement of the euro or US dollar in international payments.
Much of the observable offshore RMB activity is already concentrated in Hong Kong. More than 70% of offshore RMB payments recorded by Swift pass through the city, while RMB lending by Hong Kong banks reached a record 935 billion RMB in 2025 and offshore RMB bond issuance exceeded 1 trillion RMB for the second consecutive year. Research from the Bank for International Settlements (BIS) finds that banking links with China and other financial connections are increasingly important in explaining RMB trading growth. Trade remains a major source of demand for the currency, but more of the activity around it now depends on the ability to finance positions, trade assets and manage risk.
Hong Kong’s position as a leading offshore RMB hub is also evolving within an increasingly interconnected Asian financial landscape. As China expands the international use of its currency, several financial centres are developing overlapping yet distinct roles in facilitating RMB transactions and investments. While Beijing sets the broader monetary and financial policy framework, Shanghai remains a principal centre for onshore RMB activity and gold trading, and has recently expanded its offshore financial services. Hong Kong, meanwhile, continues to serve as a gateway between mainland China and international capital markets, offering offshore RMB liquidity, financing and investment channels within a comparatively open financial system. Beyond these mainland-focused financial connections, Singapore plays an important role as a regional financial centre, providing foreign-exchange, corporate treasury and RMB clearing services for businesses operating across Southeast Asia. The expansion of gold-market infrastructure in both Hong Kong and Singapore could also strengthen liquidity and price discovery across Asia, with Hong Kong building on its connections to mainland China’s bullion market and Singapore developing its international trading, storage and clearing capabilities. In RMB markets, these financial centres continue to play distinct but complementary roles, with Hong Kong retaining a particular advantage through its established offshore financial infrastructure and direct connections to mainland China’s financial markets.
The RMB Business Facility, introduced by Hong Kong in 2025 with a remit extending beyond trade finance to working capital and capital expenditure, was expanded in July 2026 to 500 billion RMB, with funding available for up to three years. The Hong Kong Monetary Authority (HKMA) is also widening short-term liquidity arrangements. Repo (repurchase agreement) reforms broaden access to secured short-term funding, while broader collateral eligibility allows eligible mainland bonds to be used to raise financing. Bond Connect provides overseas investors with access to mainland bonds and Swap Connect allows them to hedge interest-rate exposure. An electronic platform for bond and foreign-exchange trading is also being developed, alongside additional RMB products and a planned RMB counter under Southbound Stock Connect.
Longer-term funding reduces refinancing needs, while a bond that can be pledged or used in a repo is more useful for funding and portfolio management. Standard Chartered says it has already made RMB working-capital loans through the Business Facility in Hong Kong and used the facility for intra-group financing elsewhere in Asia. Swap Connect turnover has also risen strongly as overseas investors use derivatives to manage mainland interest-rate exposure. These examples point to growing practical use of RMB financing and hedging arrangements.
For European companies, these developments coincide with greater use of the RMB in some trade with China. ECB research based on French customs data estimates that the share of exports to China invoiced in RMB rose from around 10% in 2018 to about 30% in 2024 and the share of imports from roughly 6% to 12%. Use remains concentrated among a relatively small number of larger firms, which the ECB links partly to the fixed costs involved in changing invoicing and treasury arrangements. Comparable national evidence is available for Germany, where 23% of exports to China and 16.7% of imports were invoiced in RMB in 2025. However, adoption remains concentrated in particular trading relationships: across the euro area’s trade with non-EU countries, the RMB accounted for only around 2% of invoicing in 2024. As RMB invoicing grows, access to RMB funding and hedging matters more for corporate treasury management. Hong Kong’s 2026 Policy Address explicitly envisages the RMB Business Facility channelling funding to offshore markets including Europe. The facility is not confined to firms operating in Hong Kong.
Smaller firms face different constraints, with less treasury capacity to manage unfamiliar banking and payment procedures. In the EU SME Centre’s 2026 survey of European companies operating in China, 35% of SME respondents reported difficulty obtaining loans, while late payments were among the most frequently cited critical problems. Similar difficulties emerged in the European Union Chamber of Commerce in China’s 2026 Business Confidence Survey, which found that 53% of respondents reported difficulties accessing credit or funding, while 65% experienced problems with cross-border money transfers. Although the surveys cover different respondent groups, both highlight persistent financing and payment constraints affecting European businesses in China. The EU SME Centre’s payment guidance also highlights unfamiliarity with Chinese banking products, foreign-exchange controls and time-consuming cross-border procedures. Hong Kong cannot remove constraints inside mainland China, but participating banks can use the Business Facility for working-capital and other corporate lending, including through overseas entities within their banking groups. For smaller firms, deeper offshore liquidity matters only if banks turn it into financing and payment services available to smaller corporate clients.
Gold has become one of the most visible extensions of Hong Kong’s financial push beyond bonds and foreign exchange. While RMB-denominated gold trading is already established through the Shanghai Gold Exchange, Hong Kong is expanding the offshore infrastructure supporting these markets. The Shanghai Gold Exchange has established its first offshore certified vault in the city, while Hong Kong’s central gold clearing and settlement system is already operating on a trial basis. Delivery Connect provides a two-way physical transfer mechanism for eligible bullion between Hong Kong’s over-the-counter market and the Shanghai Gold Exchange’s international board. The clearing system has 11 banks serving as provisional direct participants and is being connected to Hong Kong’s real-time gross settlement system to enable delivery-versus-payment settlement, linking delivery to payment.
The Hong Kong government is also supporting the expansion of storage and refining capacity. A Hong Kong-specific reference rate has been available through Bloomberg and the London Stock Exchange Group (LSEG) since its July 2026 launch. Gold storage capacity is targeted to rise above 2,000 tonnes within three years. Hong Kong’s First Five-Year Plan treats gold as an entry point into a wider commodities business. The city’s inclusion in the London Metal Exchange (LME) warehousing network extends the push into storage and physical delivery of base metals. The strategy now covers storage, logistics and financing as well as trading and risk management.
Plans for RMB-denominated, physically settled gold futures connect that commodities programme directly to the currency. Once introduced, such a contract would allow traders to hedge gold-price exposure in RMB, with physical settlement in Hong Kong. The PBoC has also expressed support for the development of additional commodity futures and spot products denominated and settled in RMB. Greater influence over international gold pricing would require far more than launching a contract. Secretary for Financial Services and the Treasury Christopher Hui said, “I see pricing more as an outcome”, arguing that greater pricing influence would follow only after Hong Kong had built sufficient liquidity, gold volume and a critical mass of market participants.
Despite the expansion of offshore products, the RMB remains closely tied to the existing dollar-centred financial system. It accounted for 8.8% of global foreign-exchange turnover in the BIS 2025 survey, yet 96% of transactions involving it still had the US dollar on the other side. China retains capital controls, and Hong Kong’s gold measures do not make the RMB gold-backed or freely convertible. Hong Kong is instead expanding the functions available offshore, giving firms more ways to finance, hedge, collateralise and settle RMB activity while mainland opening remains selective.
Europe already has its own RMB clearing infrastructure, and that capacity is also expanding. Deutsche Bank has been designated as an RMB clearing bank in Frankfurt, broadening local processing, clearing and settlement capacity for European institutions and companies. Hong Kong’s comparative role therefore rests less on basic RMB processing than on the concentration of offshore liquidity and its direct links into mainland securities, derivatives and commodity markets.
Deeper financial integration with the mainland also increases Hong Kong’s exposure to China’s economic and financial risks. The International Monetary Fund (IMF) describes Hong Kong as having reinforced its position as an international financial centre and a ‘super-connector’, while noting that deeper integration increases its exposure to mainland economic developments, financial risks and competition. European Chamber survey evidence points to a similar mix: firms continue to value Hong Kong’s efficiency and connectivity while questioning its long-term distinctiveness and exposure to geopolitical change.
For European companies, the changes under way in Hong Kong could increasingly influence everyday treasury decisions. These include the currency used for invoicing, where China-related working capital is raised, how an RMB bond is financed or hedged, and whether commodity transactions are settled through the city. Some larger firms are already making greater use of RMB in trade invoicing. Smaller companies face higher relative costs in financing, payments and treasury management. The test is whether Hong Kong’s deeper wholesale RMB markets translate into services firms can actually use, reinforcing its practical gateway role for European business.
Beyond Market Access: The RMB’s Evolving International Role
Hong Kong’s further expansion into RMB-denominated gold trading could also contribute to greater transparency in how the currency is valued internationally. The RMB has long faced criticism over whether its exchange rate accurately reflects underlying market conditions. A deeper and more liquid gold market priced directly in RMB could provide an additional market-based reference point, allowing investors to compare RMB-denominated gold prices more directly with international benchmarks in US dollars and euros, while potentially offering greater insight into how prices are formed across different currency markets. While this would not independently establish the RMB’s definitive value or resolve longstanding concerns over exchange-rate misalignments, it could strengthen price discovery in RMB-denominated commodity markets and provide further insight into how the currency is priced internationally. For European financial institutions and businesses, greater transparency and liquidity could support more informed currency comparisons, improved hedging opportunities and a clearer assessment of RMB-denominated transactions. Over time, these developments could contribute to a more internationally integrated RMB, even as its broader valuation continues to depend on China’s exchange-rate framework and underlying economic fundamentals.
Beyond these developments, the expansion of RMB financing, settlement and commodity markets could strengthen the currency’s position as an alternative for international transactions traditionally conducted in US dollars. This is particularly relevant for China’s trading partners in ASEAN and other emerging economies, where more accessible RMB payment, financing and hedging channels could facilitate greater use of the currency in cross-border trade and investment. Hong Kong’s developing gold-market infrastructure could reinforce this process by expanding opportunities for RMB-denominated commodity pricing and settlement, further supporting the currency’s international use. While these developments do not imply a fundamental shift away from the dollar-centred international financial system, they could gradually broaden the range of currencies and financial channels available to businesses and investors, strengthening the RMB’s position in international markets.
Authors: Thomas Nielsen, EIAS Associate Researcher & Moritz Wendt, EIAS Programme Director
Photo credits: Unsplash