Why China is so determined to push for full RMB convertibility in 2015: HSBC

HONG KONG – HSBC says there are three main reasons why Beijing is so keen to move to full RMB convertibility as early as this year. These are:

* Opening capital markets in an orderly way is a key part of an overall reform package aimed at solving China’s domestic financial problems. “Although China has plenty of savings, it needs the skills of sophisticated global institutional investors to develop efficient financial markets.”

* Full RMB convertibility doesn't mean 100% free and instantaneous movement of capital across borders. “Rather, it will follow the Asian model, whereby there are still certain restrictions. Combined with the country's substantial FX reserves, this should keep potential risks in check.”

* The RMB is already far more convertible than many think. “Only four of 40 items under the capital account are non-convertible. Further steps towards easing restrictions on cross-border investment and FX transactions and expanding the "Q" schemes should lead to a breakthrough in full convertibility this year.”  www.hsbc.com (ATI).