William Zhu, who works for the Industrial and Commercial Bank of China, warned Tuesday the Asian country is speeding up the process of liberalizing its financial system — which means Canadians may only have three or four years to fully benefit from the competitive edge the hub will provide.
"(There's) quite a limited time window for us to implement it because China is liberalizing capital accounts," Zhu, president of the bank's Canadian subsidiary, told House of Commons finance committee.
"After the (full) liberalization of capital accounting, you have no competitive advantage as a renminbi offshore centre in North America."
The offshore, virtual hub will become the first renminbi — or yuan — trading centre in the Americas.
It will allow faster, more-secure conversion into China's currency and will help Canadian companies save on exchange costs. Currently, Canadian exporters are forced to use the U.S. dollar to do business in China.
The deal to establish a trading centre in Canada was announced last fall during Prime Minister Stephen Harper's visit to China.
Zhu, whose bank was appointed Canada's renminbi carrying bank in November, told the hearing a launch ceremony for the trading centre's clearing function is scheduled for March 23.
Canadian retailers who sell goods produced in China are currently forced to add between five and eight per cent to their prices to cover currency-transaction costs, BMO Capital Markets' head of foreign exchange products told the committee.
"Taken together over the course of a year, this adds billions of dollars to the prices of imported goods," C.J. Gavsie said.
The hub's success, however, still faces challenges.
Zhu said the Canadian market will not be able to generate big-enough trading volumes on its own for the centre, which means the hub will have to attract business from other countries in the hemisphere, particularly from the United States.
He also stressed the need to raise awareness about the hub's benefits. He said a recent survey showed only five per cent of Canadian companies were aware they can do business with Chinese clients using the renminbi.
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