Economists are still debating whether or not China is truly intent on relaxing its currency's trading restrictions, but some promising signs show just how far that government has already come.
The latest example comes from Maynards Industries, a B.C.-based firm that recently became the first Canadian firm to conduct a trade in renminbi. HSBC Bank Canada facilitated the deal by reaching out to its Hong Kong and Chinese offices.
In 2009, the Chinese government initiated a pilot renminbi trade settlement program and about a year later the authorities expanded the number of provinces and companies that could trade in the currency. Before any of this, all trade with China was conducted in U.S. dollars.
"We all know the importance of the Chinese economy, right now it's the second-largest in the world," said Tom Niebuhr, HSBC's North American head of product, trade and supply chain services. Because of that, he sees a "desire by Canadian companies to obviously grow U.S. exports, but to also look elsewhere, and China is certainly at the top of the list."
Mr. Niebuhr gave the example of a client whose new trade partner in China said that they would only accept the first payment in U.S. dollars and the rest needed to be in renminbi. At the moment, the Chinese partner buys the current product domestically in renminbi and wants to keep dealing in the same currency.
But Mr. Niebuhr said that Canadian businesses that are looking to get into renminbi trade need to be careful. Only certain Chinese businesses have been authorized to trade in the currency -- those that have been designated an MDE, a Mainland Designate Enterprise.