London to develop further as yuan trading hub
BEIJING - China and the United Kingdom on Tuesday agreed to continue to build London into a major offshore market for yuan trading, underlining the strong financial ties between the two countries.
Both sides welcomed strong growth of London's renminbi markets, making the capital city the most active renminbi center in the world outside China, according to a joint statement after the fifth China-UK Economic and Financial Dialogue held in Beijing.
"China recognized London's major role in increasing the international use of the renminbi, and both sides agreed to continued collaboration to support London's offshore market," the statement said.
To boost London's market status, China will give investors based in the city the right to buy 80 billion yuan worth of stocks, bonds and money market instruments issued by financial institutions in the Chinese mainland.
China allows foreign institutional buyers to trade yuan-denominated financial products through a regime called RQFII, or Renminbi Qualified Foreign Institutional Investor.
As a means to encourage foreign investors to hold the yuan, the RQFII now has a global quota of 350 billion yuan.
The extension of RQFII will deepen China's financial markets and strengthen renminbi activity in the offshore market, the statement said.
"China agreed to further develop capital inflow and outflow channels for renminbi, including for renminbi trapped onshore, overseas direct investment and the development of Qualified Domestic Institutional Investor (QDII) quota to support liquidity in the offshore market," it said.
In addition, both sides agreed to support further renminbi bond issuance in the UK by Chinese as well as international firms, and the development of London as an offshore renminbi debt issuance center.
A number of cities are vying for China's permission to be allocated as a center for clearing yuan trading offshore, in expectation of providing lucrative financial services.
The dialogue was co-chaired by Chinese Vice Premier Ma Kai and the UK's Chancellor of the Exchequer George Osborne.
