Half of 300 senior asset managers polled at a conference this week, believe that the Chinese government will allow full Reminibi convertibility in three to five years, a move which could both help and hinder Hong Kong's status as China's international financial gateway. 

Twenty-eight per cent of those polled believe Chinese RMB convertibility will happen in around eight years, while 22 per cent believe it will not take place for ten years or more.

The results were taken at the sixth annual Hong Kong Investment Funds Association conference held this week at the JW Marriott hotel, attended by 300 senior members of the global asset management and financial services industry. The conference looked at a number of topics surrounding the implications of the Mainland's 12th Five-Year Plan on Hong Kong's fund industry, and how the dynamics between Shanghai and Hong Kong will play out.

The Chinese government has thus far resisted making the yuan fully convertible, as it will mean unlimited foreign inflows and a stronger local currency, making the yuan less competitive to trade with.

However the US and Europe have demanded that China makes its currency fully convertible in order to be part of the International Monetary Fund's currency basket. The Chinese government has not committed o a time frame, but recent moves by the People's Bank of China to broaden the yuan trade band to two per cent, plus the speed at which it has encouraged the currency to be used more widely outside China, has led experts to believe that the move may come sooner than expected.

A convertible currency may have a negative knock on effect for Hong Kong, which currently acts as a channel for investors seeking to buy A-shares from China. When the yuan is freed, global investors will be able to go directly to Shanghai to invest in China's burgeoning economy. 

However, quid pro quo, the move will also allow Chinese investors to invest offshore, which means more Mainland money will be sent through Hong Kong.

Julia Leung, under secretary for financial services and the treasury, financial services and the treasury bureau in the Hong Kong government, believes the key is to be ready for RMB convertibility to happen at any time. 

"Working in the government we have to assume that convertibility will happen at any time, to preserve our first mover advantage," said Leung. But she cautioned that it depends "how you define fully convertible".

She was one of the panellists at the Hong Kong Investment Funds Association conference. She was joined on stage by Yang Qiumei, head of Mainland development department, Hong Kong Exchanges and Clearing Ltd. 

Yang said: "Shanghai having a free market and having RMB freely traded in Hong Kong is the most important factor in (how the two cities will interact) in coming years. That will distinguish Hong Kong as the offshore centre and Shanghai as the onshore centre of China." 

The audience was also asked about whether they thought the two cities were competitors or partners. Sixty-eight per cent said they believed the two are both partners and competitors, while 28 per cent felt they were competitors. Only 4 per cent said they were partners.

Yang agreed that Hong Kong and Shanghai were not necessarily competitors, more strategic business partners. She said: "Hong Kong can serve as the hinterland to China, and that is our first point of positioning. Hong Kong should aspire to be China's global financial centre."

Hong Kong is aiming to become to offshore RMB centre, asset management centre and initial public offering centre, according to its 12th Five-Year plan.

Under the plan, Hong Kong's fund industry may have to innovate rapidly, particularly to develop itself as the leading offshore renminbi product market and the asset management hub.