Right.
Evidence of meeting #69 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was renminbi.
A recording is available from Parliament.
Evidence of meeting #69 for Finance in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was renminbi.
A recording is available from Parliament.
9:15 a.m.
President and Chief Executive Officer, AdvantageBC
—but if we want to actually build Canada's reputation for a financial services industry, I think that's to our benefit.
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Sure, so in understanding the advantage, the preponderance of the advantage is in that aspect of Canada taking a larger international role as a financial services hub and as a place where people can come to do business if they're looking to do business with China.
9:15 a.m.
President and Chief Executive Officer, AdvantageBC
Yes. Whether it's a Canadian firm or a non-Canadian firm, I think there would be a cost advantage for those companies to do currency settlement through the Canadian hub.
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Okay.
Mr. Curtis, you were a chief economist at Foreign Affairs. Is that right?
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Was there ever a connection in terms of the setting up? Would you classify this as an important announcement between Canada and China?
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Traditionally for any trading or negotiations with China, there was, in various iterations of various governments, some connection to an advancement in human rights and that increased trade activity, one to the other. You were in Foreign Affairs. I assume that was a policy that you were aware of or a position that the Canadian government took from time to time.
9:15 a.m.
Consultant and Adjunct Professor, As an Individual
Aware of, although as economists we tended to focus on the trade and investment innovation aspects of that. We were aware of the context, but certainly weren't the—
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
It wasn't a prescriptive element in Foreign Affairs as you were looking to do or enhance new negotiations that this conversation was also implicit?
9:15 a.m.
Consultant and Adjunct Professor, As an Individual
We were aware of the context in which we were working, but I wouldn't offer any more than that.
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Okay.
Mr. Osmar, Mr. Hansen has well articulated B.C.'s position in terms of wanting a pan-Canadian model here, not focused.... Initially when the RMB was being discussed in Canada, it was who gets it. Is Vancouver going to get this or is it going to be Toronto? Then, of course, this is not your typical trading floor. It's not a physical structure. Does it make any difference at all in terms of the locality of where the trade is actually initiated with your financial institution or any other, if it's your offices in Vancouver or in Montreal or Toronto?
9:15 a.m.
Managing Director, Head of Market Infrastructure, Royal Bank of Canada
To the comment that was raised by Colin earlier that this is a facilitation, there is a lot of book entry going on with electronic transactions so that the actual physical location is less important, not unlike now where you can walk into virtually any branch in the country and transact, even if it's not your branch, in terms of transacting basic banking services. So this is very similar and the location of where the trades take place will often be driven by pricing, time zones, a whole range of client preference for access. It is a facilitation that will help access, but it doesn't necessarily have a physical bias toward it.
9:15 a.m.
NDP
Nathan Cullen NDP Skeena—Bulkley Valley, BC
Okay, this is my very last question, Mr. Curtis. You suggested that this wouldn't advance significantly the idea that the yuan would become a challenge to the U.S. greenback for global currency clearing. Is this not a step in that direction? We've seen the increase in global trade on the yuan versus the dollar. Is this not a development that way? I don't put any pre-judgment to that comment.
9:15 a.m.
Consultant and Adjunct Professor, As an Individual
The answer is that it's a step, but the United States dollar is dominant and 87% of the world's transactions of commerce investments remain in United States dollars.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you, Chair.
Thanks to our witnesses for being here today and a special welcome to those who actually travelled quite far to be here.
My first question is for Colin Hansen from warm British Columbia.
Colin, it is very appropriate that you are here today, given your background as former minister responsible for the Asia-Pacific initiative and the Olympics, former minister of finance for British Columbia, and you and I both sat on the Asia Pacific Trade Council together about 10 years ago. Thank you for being here, and also thank you for pioneering and championing this particular issue through AdvantageBC. I know that you wrote a paper on it and you were very helpful at the early stages. That is very much appreciated.
Can you explain how this new trading hub is going to impact B.C.'s economy?
9:20 a.m.
President and Chief Executive Officer, AdvantageBC
There are a couple of things. First of all, it's an opportunity for us to further strengthen our financial services sector in Vancouver, and as I mentioned, it's largely around trade finance but the other big advantage is time zone. I think we don't recognize how strategic that is for Canada, and when you look at British Columbian companies that are exporting into China, British Columbia has the largest percentage of its exports going to Asia of any province in Canada, by a fairly substantial measure.
To be able to do that transaction in renminbi, as opposed to the extra cost and risk and time delay of going through the U.S. dollar, would be a financial benefit to B.C. companies as well.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you.
China's direct investment in British Columbia in natural resources, in forestry, and now LNG has expanded rapidly in the last few years. Do you see how that may be positively impacted as well as a result of this trading hub?
9:20 a.m.
President and Chief Executive Officer, AdvantageBC
Yes, both through our growing partnership with China and the reputation that Canada is gaining in China as a trusted partner. We have seen over the last number of years a significant bias with more Canadian investment going into China than vice versa. We've now seen that equalize, but in the coming years we're going to see that two-way flow of investment grow significantly and the new RQFII allocation is a big opportunity for western Canadian investment firms to actually invest directly into Chinese equities as well.
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
Thank you very much.
My next question is for Madam Sun.
Madam Sun, China has opened up a number of RMB trading hubs around the world in the last few years and the question begs itself as to whether or not, eventually, this is going to lead to a liberalization of the RMB or a free float of the RMB. What is your opinion on that?
9:20 a.m.
Principal Officer and General Manager, Toronto Branch, China Construction Bank
I think China is now paying more attention to the renminbi hubs across the world; 11 RMB centres have already been set up. Now China will move forward with this strategy and will promote the RMB further worldwide.
The central bank in China is now developing the new system for RMB clearing and settlement. It estimates that new system will be launched in 2016. After that all RMB clearing in overseas countries will be more on time.
The second measure is that in China they also have several free trade zones, including Shanghai. Guangzhou is also coming up and other cities like Tianjin. This could be a company accessing the prices of the RMB hub from abroad. Because the free trade zone can do more flexible business on the currency side, and the—
9:20 a.m.
Conservative
Andrew Saxton Conservative North Vancouver, BC
I'm sorry to interrupt.
My question is more specifically with regard to the free floating of the RMB, so it becomes less of a controlled currency. Do you foresee that taking place?
