Sarah Hall: Respatialising Finance

131 119

132 120

133 121

134 122

135 123

136 124

137 125

138 126

139 127

140 128

141 129

142 130

143 131

144 132

145 133

146 134

147 135

148 136

149 137

150 138

151 139

152 140

153 141

154 142

155 143

156 144

157 145

158 146

159 147

160 148

161 149

162 150

163 151

164 152

165 153

166 154

167 155

168 156

169 157

170 158

171 159

172 160

173 161

174 162

175 163

176 164

177 165

178 166

179 167

180 168

181 169

182 170

183 171

184 172

185 173

186 174

Figure 4.1 Monetary form, geographical reach and policy basis of RMB internationalisation

Figure 5.1 Renminbi business of UK monetary financial institutions (2015–2020, £m)

Figure 5.2 RMB foreign exchange daily turnover in London by instrument (2015–2020, £m)

Figure 5.3 Timeline of London’s development as an offshore RMB centre

Figure 6.1 National insurance registrations of Chinese nationals by London borough 2002–2016

Figure 6.2 Location of Chinese financial and related professional service firms in London’s financial district

Table 4.1 Attributes of leading offshore RMB centres

Table 4.2 List of interviewees

Table 5.1 Factors accounting for the identification of London as the first western offshore RMB centre

Table 6.1 Big four Chinese commercial state-owned banks operating in London, by Tier 1 capital

Table 7.1 RQFII licences issued in London 2013–2014 (RMBbn)

Table 7.2 Allocated and used RQFII quotas by country (US$bn)

The RGS-IBG Book Series only publishes work of the highest international standing. Its emphasis is on distinctive new developments in human and physical geography, although it is also open to contributions from cognate disciplines whose interests overlap with those of geographers. The Series places strong emphasis on theoretically-informed and empirically-strong texts. Reflecting the vibrant and diverse theoretical and empirical agendas that characterize the contemporary discipline, contributions are expected to inform, challenge and stimulate the reader. Overall, the RGS-IBG Book Series seeks to promote scholarly publications that leave an intellectual mark and change the way readers think about particular issues, methods or theories.

For details on how to submit a proposal please visit:

www.rgsbookseries.com

Ruth Craggs, King’s College London, UK

Chih Yuan Woon, National University of Singapore

RGS-IBG Book Series Editors

David Featherstone

University of Glasgow, UK

RGS‐IBG Book Series Editor (2015–2019)

The research that underpins this book draws on an extensive period of fieldwork conducted with policymakers and financiers working in London and Beijing dating back to 2015. I would like to thank all the people I interviewed who gave up their time to be interviewed and talked me through the issues they were facing in their everyday work with care and patience. As a result, I learnt more about the intricacies of RMB internationalisation and London’s role within it than I could have ever done through reading secondary sources. Over the course of the research, I shared these insights with Fenghua Pan, and I would like to express thanks for Fenghua for sharing his incredible knowledge of the Chinese banking and financial system with me and hosting me at the early stages of the project at Beijing Normal University.

The research would not have been possible without the financial support of The British Academy through a Mid-Career Fellowship (award number MD 13006) and a period of research leave from the School of Geography at the University of Nottingham that gave me the time to learn about RMB internationalisation and London’s role within it. My colleagues at the University of Nottingham have been extremely supportive in terms of giving me the time to undertake this work and I would particularly like to thank Louise Crewe, Shaun French and Andrew Leyshon who have supported me through the good times and the trickier ones. The arguments presented here have benefited from conference audiences at a number of events where I presented preliminary ideas. I would particularly like to thank those at the Universities of Durham, Manchester, Cambridge and Newcastle as well as colleagues who attended meetings of the Royal Geographical Society with the Institute of British Geographers, the American Association of Geographers, the Global Conference in Economic Geography and the Global Network on Financial Geography. Through these events, I’m lucky to be supported by a wider network of financial and economic geographers that I feel very lucky to be a part of. Comments throughout the project from Karen Lai, Kean Fan Lim, Paul Langley and Adam Leaver have been incredibly helpful in refining the arguments in the book.

I would also like to acknowledge the support and patience of David Featherstone and Jacqueline Scott within the RGS-IBG book series team for their support and above all patience as I tried to complete this text. This has been particularly true as the final revisions to the book coincided with the coronavirus pandemic in the UK. As I tried to juggle completing the revisions with looking after my children the book would not have been possible without the support of my family (especially Mike, who has heard more about RMB internationalisation than he ever wanted to) and friends at home in looking after Raffi, Clemmie and Gus. This is for the three amigos.

Respatialising Finance positions international financial centres as vital – but often overlooked – analytical lenses through which to understand the changing position of Chinese finance within the international financial system and specifically the internationalisation of its currency, the renminbi (RMB). In so doing, I develop a revitalised reading of financial centres that places questions of the state, politics and power more centrally in both their own internal dynamics and in their role in shaping global finance. Since the 2007–2008 financial crisis, the growing internationalisation of the RMB has been one of the most significant developments within global monetary relations. Indeed, in 2014, Deutsche Bank argued that the internationalisation of the RMB was the most significant development in international monetary affairs since the launch of the euro in 1999 (Deutsche Bank 2014). It refers to the relatively rapid and recent transformation in the geography of the Chinese currency facilitated through Chinese state support in the form of the People’s Bank of China in particular. This geography has been transformed from a situation in the early 2000s in which flows of RMB in and out of mainland China were heavily restricted to one in which, by July 2020, it was the fifth most commonly used currency for payments internationally behind the US dollar, sterling, the euro and the yen (SWIFT 2020). Meanwhile, the growing international status of the RMB was also reflected in the International Monetary Fund including the RMB in its basket of special drawing rights (SDR) from October 2016 together with the US dollar, the euro, the yen and sterling. Kirshner (2014: 220) provides a valuable summary of the early motivations and uncertainties surrounding RMB internationalisation: