News / Asia

McDonald's Turns to Chinese Yuan for Funding

Two Chinese men walk past a billboard advertising US fast-food giant McDonald's, in Yichang, central China's Hubei province (Jul 2010 file photo)
Two Chinese men walk past a billboard advertising US fast-food giant McDonald's, in Yichang, central China's Hubei province (Jul 2010 file photo)

McDonald's Corporation became the first foreign company to issue a bond in the Chinese currency, as Beijing takes new steps to increase the use of the yuan in international transactions.

The U.S. fast-food giant this month borrowed 200 million yuan, the equivalent of 29 million dollars, by issuing a bond to investors in Hong Kong. With the help of Standard Chartered Bank, McDonald's took advantage of recently relaxed rules in the use of the Chinese currency, also known as the renminbi.

Sundeep Bhandari, regional head of global markets in Northeast Asia at Standard Chartered, says the McDonald's bond will be first of many from foreign companies.

"We are talking to other clients who are interested to issue in Hong Kong. Obviously, the clients who are most keen to look into this are those who have presence in China so they can raise funds in Hong Kong and remit back to China," said Bhandari.

In February, China's central bank allowed foreign companies to issue yuan bonds in Hong Kong, to promote the use of the currency in international capital markets.

The McDonald's bond and a few others by Hong Kong companies offer those holding large amounts of yuan a new way to invest it. At the same time, McDonald's raises capital to expand in China, where it will open 175 new restaurants this year.

In the past, China  more tightly restricted use of its currency. Foreign companies in China had to exchange yuan to U.S. dollars before they could transfer money to their home country.

But China's economy is dependent on exports, and that increases demand to use the yuan overseas. In June, the government allowed Hong Kong banks to facilitate trade payments in yuan between companies in different countries. It also relaxed restrictions on transferring yuan between banks and companies in Hong Kong and allowed yuan deposit holders here to invest their money.

Amar Gill, head of thematic research at the investment bank CLSA Asia Pacific Markets, says Hong Kong banks now hold about 80 billion yuan.

"I expect that in the next two years it probably would at least double what it is now and that would help to develop a bond market in Hong Kong of renminbi paper," said Gill.

Earlier this month, Beijing allowed central banks and commercial banks overseas to buy government bonds in China.

However, the yuan still can not be exchanged with all other currencies, all over the world. Nor does the exchange rate move freely, as do the currencies of other big economies, such as Japan, the United States and Germany. Bhandari says China is moving gradually toward having a fully convertible currency.

"You're going to see further relaxation at a pace that makes sense," said Bhandari.

Despite moves to internationalize the yuan, China's foreign exchange policy continues to cause friction with its trading partners, such as the United States. The central bank limits the daily movement in the value of the yuan against the U.S. dollar.

This, the U.S. and other governments argue, keeps the yuan unfairly weak and gives Chinese exports an unfair advantage, contributing to trade imbalances.

You May Like

Hezbollah Chief Says Does Not Want War But Ready for One

VOA's Jerusalem correspondent reports that with an Israeli election looming and Hezbollah's involvement in Syria, neither side appears interested in a wider conflict More

Multimedia VOA SPECIAL REPORT: Despite Danger, Best US Minds Battle Deadly Virus

Scientists at America's premier biological research center race in military confinement to find effective drugs, speedier tests and a safe vaccine amid the deadliest outbreak of Ebola in history More

Kurdish Poet Battles to Defend Language, Culture

Kawa Nemir's work is an example of what he sees as an irreversible cultural and political assertiveness among Kurds in Turkey More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Egypt's Suez Canal Dreams Tempered by Continued Unresti
X
Heather Murdock
January 30, 2015 8:00 PM
Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Egypt's Suez Canal Dreams Tempered by Continued Unrest

Egypt plans to expand the Suez Canal, raising hopes that the end of its economic crisis may be in sight. But some analysts say they expect the project may cost too much and take too long to make life better for everyday Egyptians. VOA's Heather Murdock reports.
Video

Video Threat of Creeping Lava Has Hawaiians on Edge

Residents of the small town of Pahoa on the Big Island of Hawaii face an advancing threat from the Kilauea volcano. Local residents are keeping a watchful eye on creeping lava. Mike O’Sullivan reports.
Video

Video Pro-Kremlin Youth Group Creatively Promotes 'Patriotic' Propaganda

As Russia's President Vladimir Putin faces international pressure over Ukraine and a failing economy, unofficial domestic groups are rallying to his support. One such youth organization, CET, or Network, uses creative multimedia to appeal to Russia's urban youth with patriotic propaganda. VOA's Daniel Schearf reports.
Video

Video Mobile Infrared Scanners May Help Homeowners Save Energy

Mobile photo scanners have been successfully employed for navigational purposes, such as Google Maps. Now, a group of scientists from the Massachusetts Institute of Technology says the same technology could help homeowners better insulate their houses and save some money. VOA’s George Putic has more.
Video

Video Filmmakers Produce Hand-Painted Documentary on Van Gogh

The troubled life of the famous 19th century Dutch painter Vincent van Gogh has been told through many books and films, but never in the way a group of filmmakers now intends to do. "Loving Vincent " will be the first ever feature-length film made of animated hand-painted images, done in the style of the late artist. VOA’s George Putic reports.
Video

Video Issues or Ethnicity? Question Divides Nigeria

As Nigeria goes to the polls next month, many expect the two top presidential contenders to gain much of their support from constituencies organized along ethnic or religious lines. But are faith and regional blocs really what political power in Nigeria is about? Chris Stein reports.
Video

Video Rock-Consuming Organisms Alter Views of Life Processes

Scientists thought they knew much about how life works, until a discovery more than two decades ago challenged conventional beliefs. Scientists found that there are organisms that breathe rocks. And it is only recently that the scientific community is accepting that there are organisms that could get energy out of rocks. Correspondent Elizabeth Lee reports.
Video

Video Paris Attacks Highlight Global Weapons Black Market

As law enforcement officials piece together how the Paris and Belgian terror cells carried out their recent attacks, questions are being asked about how they obtained military grade assault weapons - which are illegal in the European Union. As VOA's Jeff Swicord reports, experts say there is a very active worldwide black market for these weapons, and criminals and terrorists are buying.
Video

Video Activists Accuse China of Targeting Religious Freedom

The U.S.-based Chinese religious rights group ChinaAid says 2014 was the worst year for religious freedom in China since the end of the Cultural Revolution. As Ye Fan reports, activists say Beijing has been tightening religious controls ever since Chinese leader Xi Jinping came to office. Hu Wei narrates.
Video

Video Theologians Cast Doubt on Morality of Drone Strikes

In 2006, stirred by photos of U.S. soldiers mistreating Iraqi prisoners, a group of American faith leaders and academics launched the National Religious Campaign Against Torture. It played an important role in getting Congress to investigate, and the president to ban, torture. VOA's Jerome Socolovsky reports.
Video

Video Former Sudan 'Lost Boy' Becomes Chess Master in NYC

In the mid-1980’s, thousands of Sudanese boys escaped the country's civil war by walking for weeks, then months and finally for more than a year, up to 1,500 kilometers across three countries. The so-called Lost Boys of the Sudan had little time for games. But one of them later mastered the game of chess, and now teaches it to children in the New York area. VOA’s Bernard Shusman in New York has his story.
Video

Video NASA Monitors Earth’s Vital Signs From Space

The U.S. space agency, NASA, is wrapping up its busiest 12-month period in more than a decade, with three missions launched in 2014 and two this month, one in early January and the fifth scheduled for January 29. As VOA’s Rosanne Skirble reports, the instruments being lifted into orbit are focused on Earth’s vital life support systems and how they are responding to a warmer planet.

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More

All About America

AppleAndroid