May 18, 2017, by lzzeb
Chinese finance comes to London
Sarah Hall blogs about her latest research that examines how and why new forms of Chinese finance are becoming increasingly important within London’s financial district.
One of the most significant changes currently occurring within the international financial system is the growing internationalisation of money and finance from China. This reflects broader arguments that power in the global economy is shifting eastwards, away from North America and Europe. As a result the twenty first century is often labelled the ‘Chinese century’.
It is hard to underestimate the speed, scale and scope of Chinese financial internationalisation within this. In the early 2000s, the Chinese currency, the Renminbi (RMB) had virtually no international influence because prior to 2004, trading denominated in RMB was not allowed outside of China. Following the opening up of the Chinese economy, demonstrated most clearly by China’s entry into the World Trade Organisation in 2001, China has subsequently initiated a series of policy changes that have increased the use of its currency globally. Indeed, figures show that the RMB has risen to become the fifth most used currency for international payments.
Understanding how the internationalisation of theh RMB has occurred is a resolutely geographical question because it has taken place through a distinctive spatial formation. China has initiated a series of offshore RMB centre beyond mainland China to facilitate its currency internationalisation. Whilst Hong Kong and Singapore were the first such centres, London’s financial district has developed to become the first and leading western offshore RMB centre.
Since early 2015, I have been undertaking a research fellowship funded by the British Academy to reveal how and why London has assumed this position. I was fortunate to be able to build on this research with a period of dedicated research time from the School of Geography at the end of 2016. As part of this research I have been fortunate enough to travel to Beijing in order to conduct research interviews with Chinese financiers and policymakers based there as well as make new research collaborations with geography colleagues there. I have also undertaken a series of interviews with Chinese financiers working in London. I am very grateful for the time these individuals have given up to share with me their fascinating stories of how they ended up working in London and their future career aspirations.
I’m currently using these research findings to write a series of academic papers and a new book that argues that political relations, as well as more frequently studied economic relations, between London and China are central in explaining the development of London as an offshore RMB centre. In 2017, I’m looking forward to sharing this research with students in the School of Geography through my teaching on the third year Geographies of Money and finance module as well as getting feedback from my academic colleagues at international conferences in the US and Europe.