Almost two-thirds (62%) of companies currently using China’s renminbi in cross-border transactions expect the volume of activity to more than double in the next five years.
These are the findings of a survey of senior executives from the US, Europe and Asia-Pacific, commissioned by international law firm Allen & Overy, and conducted by the Economist Intelligence Unit.
Overall, 90% of respondents to the survey said that their company’s current exposure to the renminbi is either important or very important to their business.
Yet over three-quarters (77%) of respondents said that their respective organisations had little or no understanding about how to conduct renminbi transactions, which could affect the firms’ competitiveness in the future.
This suggests many non-Chinese companies have been caught by surprise at the currency’s rise as a cross-border currency, according to Allen & Overy.
With the possibility of the International Monetary Fund accepting the renminbi as a reserve currency this year, transactions carried out in the denomination could set to greatly accelerate from 2016, the law firm said.
Jane Jiang, partner for Allen & Overy, said: “Despite worries about China’s slowing growth, there is every reason to believe that the renminbi’s ascendance will not only continue, but also accelerate.
“While in the past this process was managed largely by policymakers, there are new drivers emerging on the demand side of the equation. China’s foreign investment environment is likely to see significant liberalisation in the years ahead, encouraging more companies to invest in the country and giving them more incentive to use renminbi to extend their China operations.”