Chinese mainland authorities will allow the renminbi to appreciate at a faster pace of five per cent in both 2011 and 2012, predicted J P Morgan Managing Director and Chairman of China Equities and Commodities Jing Ulrich.
“In 2010, the renminbi appreciated about three per cent against the US dollar,” said Ulrich, adding that this rate of appreciation lagged behind many other Asian currencies. “In each of the next two years, we expect the renminbi to appreciate by about five per cent. So, therefore, this will also help contain imported inflation.”
Ulrich spoke to the Hong Kong Trade Development Council (HKTDC) on Jan 11. An expanded version of Ms Ulrich’s remarks can be viewed at www.youtube.com/hktdc.
Ulrich also told the HKTDC that she expects wage growth on the mainland to reach 20 per cent this year.
“That means the [China] consumer market is set to boom,” she said. “Consumer staples to consumer discretionaries, travel, entertainment, will do very well on the back of consumer demand.”
Regarding Hong Kong’s role in the internationalisation of the renminbi, Ms Ulrich called Hong Kong “a major financial centre that is at the centre of China’s financial reform,” adding that the city’s large renminbi deposits are set to grow even more.
“Right now, total renminbi deposits in Hong Kong already approach some 300 billion, and that is rising rapidly every day, every week. As the deposits in Hong Kong in renminbi grow, there should be more renminbi-denominated assets for investors to buy into.”
