Thank you, Mr. Chair.
I am honoured to appear today before the members of the committee.
I'm very excited to be here today to talk about Canada's new renminbi hub for two reasons. First, the internationalization of the renminbi is perhaps the biggest megatrend in global finance since the introduction of the euro. With approximately $4.3 trillion in trade last year, China is well on its way to becoming the world's largest trader. This will fundamentally reshape the global economy.
The second reason I'm excited is that the Canadian Chamber of Commerce represents 200,000 businesses, and many of them are very excited by the opportunities to do more business with our second-largest trading partner. What does the renminbi hub mean for Canadian business? We think it's probably the best, most effective way to boost trade with China. We now have, or soon will have, the financial infrastructure to easily make payments and receive payments in renminbi right here in Canada.
There are big benefits for trade. First, there will be big savings on foreign exchange. We don't have to do everything in U.S. dollars, and there's no need for the intermediate conversion from RMB to U.S. dollars to CAD. We estimate that this could result in savings of $6.2 billion over 10 years.
The second big benefit, and the more important one, is more trade, doing more deals with China. In speaking to Canadian exporters, we learned that many of the big commodity deals for such products as coal, iron ore, metals, and lumber were extremely sensitive to payment terms. The prices are set globally, so if a buyer is given 120 days as opposed to 90 days, that could make all the difference and be a huge help in getting deals. We know that many Chinese companies prefer to do business in renminbi. A survey by HSBC said that 55% of Chinese companies were willing to give discounts of up to 5% if the transactions were done in renminbi. A similar survey by the French bank BNP Paribas found that the discounts were between 1% to 3%, and were pretty commonplace, for transactions in renminbi.
On the intangible side, a lot of exporters told us that trade is about building relationships. Customers have to see you as a partner who really understands their needs. The HSBC survey said that two-thirds of Chinese businesses say that international companies doing business in renminbi build stronger relationships. Then we asked which sectors will see the greatest benefits. As I said, we had sort of assumed that the commodity and natural resource companies would see the biggest benefit because of tight margins and competitive pricing. However, after we released the report last year, we started hearing from companies across Canada who were going to benefit from the renminbi hub who were in niche markets that we hadn't thought of, frankly.
There is a company in Toronto called Lord Cultural Resources. They're a small company of consultants who design and set up museums. They do everything from the architecture to the exhibits to the technology. These guys have done the Louvre. They've done the Art Institute of Chicago. They actually did Graceland in Memphis. They designed the whole Elvis thing.
At any rate, this is big business in China because tourism is enormous. Their challenge is that their customers in China are not the big multinational companies that are importing and exporting in U.S. dollars all the time; it's a local museum or a local government or an educational institution. They tell you that you can pay them in renminbi, because it's a big advantage for them. It makes their lives so much easier. They subcontract to local Chinese suppliers, to local Chinese builders, a lot of the work in doing these museums, so the ability to pay in renminbi actually makes their lives a lot easier. They also say that a lot of their competitors are companies in the United States, and that could give them a competitive edge. That's actually where you get big savings on foreign exchange, when you're recycling renminbi. You're being paid in it and then you're paying out your suppliers. A lot of companies in Canada export to China but also use Chinese suppliers as inputs, so they're both buying and selling.
From the study we did back in September, we estimate that the direct benefits of the renminbi trading hub over the next 10 years would be somewhere between an additional $21 billion to $32 billion in additional exports, plus discounts on imports totalling $2.8 billion. There are also significant advantages for Canadian banks in how they serve their U.S. customers and do more trade finance deals. There are enormous opportunities on the investment side. China is not just a trading nation; it's also a saving nation.
In 2013 offshore renminbi deposits amounted to $1.6 trillion. It's an enormous pool of capital available to companies. We're excited to see Export Development Canada and the Government of British Columbia be the first sovereigns in the world to issue bonds in renminbi. We can't wait to see the first Canadian business raise renminbi funds. There's a ton of advantages in this renminbi hub.
I'm happy to answer any questions, but first we want to thank the government for all the efforts, diplomacy, and negotiations that went into getting the renminbi hub here in Canada. We want to thank the Standing Committee on Finance for your work on this very important issue. It means a lot to Canadian business.
Thank you.