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

Tunnel Bombs Highlight Savagery of Aleppo Fight

Rebels have used tunneling tactic near government buildings, command posts or supply routes to set off explosives; they detonated their largest bomb this week under Syria's intelligence headquarters More

Sierra Leone Launches New Initiative to Stop Ebola Spread

Government hopes Infection and Prevention Control Units, IPC, will help protect patients and healthcare workers More

UN Official: Fight Against Terrorism Must Not Violate Human Rights

UN High Commissioner for Human Rights says efforts by states to combat terrorism are resulting in large scale rights violations against the very citizens they claim to defend 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.
Video Claims to Show Shia Forces in Iraq Executing Sunni Boyi
X
Jeff Seldin
March 05, 2015 2:36 AM
A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Video Claims to Show Shia Forces in Iraq Executing Sunni Boy

A graphic mobile phone video is spreading on the Internet, claiming to show Iraqi forces or Shia militia executing a handcuffed Sunni boy. Experts have yet to verify the video, but already Islamic State followers are publicizing it across social media, playing on deep-rooted sectarian fears. VOA’s Jeff Seldin reports.
Video

Video Ukrainian Authorities Struggle to Secure a Divided Mariupol

Since last month's cease-fire went into effect, shelling around the port city of Mariupol has decreased, but it is thought pro-Russian separatists remain poised to attack. For the city’s authorities, a major challenge is gaining the trust of residents, while at the same time rooting out informants who are passing sensitive information to the rebels. Patrick Wells reports for VOA.
Video

Video Volunteer Gauge-Watchers Help Fine-Tune Weather Science

An observation system called CoCoRaHS is working to improve weather science, thanks to thousands of volunteers across the country who measure precipitation in their own backyards, then share their data through the Internet. VOA's Shelley Schlender reports.
Video

Video NASA Spacecraft Approaches a Dwarf Planet

NASA’s Dawn spacecraft will make history on Friday, March 6, when it becomes the first man-made object to orbit a dwarf planet named Ceres. It is located in the asteroid belt between Mars and Jupiter, almost 500 million kilometers from Earth. Among other objectives, Dawn will try to examine two mysterious bright white spots detected on the planet’s surface. VOA’s George Putic has more.
Video

Video Young Muslims Radicalized Online

Young Muslims are being radicalized ‘in their bedrooms’ through direct contact with Islamic State or ISIL fighters via the Internet, according to terror experts. There are growing concerns that authorities and Internet providers are not doing enough to counter online extremism - which analysts say is spread by a prolific network of online supporters around the world. Henry Ridgwell reports from London.
Video

Video African Americans Recall 1960s Fight For Voting Rights

U.S. President Barack Obama and thousands of people will gather in the small southern U.S. city of Selma, Alabama, Saturday, March 7 to commemorate the 50th anniversary of a historic voting rights march that became known as “Bloody Sunday." VOA’s Chris Simkins traveled to Alabama and introduces us to some of the foot soldiers of the voting rights struggles of the 1960s.
Video

Video Positive Messaging Transforms Ethiopia's Image

Ethiopia was once known for famine and droughts. Now, headlines more often point to its fast-growing economy and its emergence as a regional peacemaker. How has Addis Ababa changed the narrative? VOA's Marthe van der Wolf reports.
Video

Video Cyber War Rages Between Iran, US

A newly published report indicates Iran and the United States have increased their cyber attacks on each other, even as their top diplomats are working toward an agreement to guarantee Iran does not develop a nuclear weapon and to free Iran from international sanctions. The development is part of a growing global trend. VOA’s Al Pessin reports from London.
Video

Video Answers Elude Families of MH370 Passengers

For the families on board Malaysia Airlines flight MH370, an airline official’s statement nearly one year ago that the plane had lost contact with air traffic control at 2:40 AM is the only thing that remains confirmed. William Ide reports.

All About America

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