Nearly two-thirds of U.S. businesses expect their trade with China to increase over the next year but U.S. firms still lag behind some of their global competitors in using China’s renminbi currency to settle cross-border trade, according to a new survey.
Financial institution HSBC polled more than 1,600 financial decision-makers at companies that do international business with or from China. Sixty-five percent of U.S. companies expect to buy and sell more goods with China in the next months, up from 55% last year and higher than the global average of 54%.
Only business leaders in the United Arab Emirates (71%) and Korea (68%) were more bullish about increasing trade with China, HSBC found.
But the survey also suggests U.S. firms may be missing out on trade opportunities with China by being slow to use the RMB to conduct business.Currently the world’s fifth most-used currency for payments, the RMB is projected to be fourth by 2020, after the U.S. dollar, the euro, and the pound.
“As the opportunity to do business with China increases, U.S. businesses can take advantage of using renminbi to deepen relationships with suppliers, reach new suppliers, or reduce their exposure to currency fluctuations,” Kevin Quinn, head of corporate banking for HSBC, said in a news release. “The benefits of using renminbi to settle trade with the world’s biggest trading nation and the second-largest trading partner of the U.S., behind Canada, can’t be overlooked.”
Only 10% of U.S. businesses said they had used the Chinese currency to settle cross-border trade, compared with the global average of 17%. Close to one-fifth of U.S. management teams have discussed using the RMB — which is in line with global peers in Australia, Canada, and the United Kingdom, but behind Singapore, Malaysia, Germany, and the UAE, where about a quarter of teams have done so.
Thirty-five percent of Chinese businesses said they are using RMB to settle trade, up from 33% in 2014.