Increasing renminbi activities in London: experts

By Cecily Liu , China Daily/Asia News Network
February 10, 2015, 12:02 am TWN

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London's development of renminbi offshore center is gaining speed as China's trade and investment flows with the UK increases and as the Chinese currency internationalizes, experts say.

This trend was discussed on Friday at this year's LSE SU China Development Forum, which is organized by the China Development Society of London School of Economic and Political Science's student union, in collaboration with EY and LSE's Asia Research Centre.

"Cooperation between the UK and China in the banking sector is at an all time high. The internationalization of the renminbi has significantly aided this trend and London is fast becoming one of the most important renminbi centers outside Asia," says Bridget Walsh, a partner at EY.

Walsh, who is also head of EY's UK & Ireland Greater China Business Services, says that her team is seeing Chinese companies using London as a gateway to finance their renminbi trade and investment overseas.

Juliet Zhou, finance sector specialist at China Britain Business Council, says that London's development of renminbi offshore center has been a crucial event in the growth of UK-China business relationship, and one that has gained significant government support.

London's efforts to become a European hub for offshore yuan activities began in September 2011 when the then Chinese Vice-Premier Wang Qishan welcomed private-sector initiatives for the development of an offshore renminbi market in London.

Since then, banks and other commercial institutions have been rapidly developing yuan products and services, including yuan deposits, financing, foreign exchange trading and the issuance of dim sum bonds.

As well, the UK's central bank has established a renminbi swap with China's central bank. Another major milestone last year was the UK government's issuance of a renminbi bond, which became the first non-Chinese sovereign renminbi bond.

'Political support...is critical'

"Many people believe that the development of renminbi centers overseas should be private sector led, but we had to admit this political support to encourage the center's development is critical," says Zhou.

Huo Rongrong, head of China and renminbi business development at HSBC EMEA, says that the growth of the UK's offshore renminbi center fits in well with other European offshore renminbi centers.

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