Fresh impetus for Sino-UK ties

Vice-Premier Ma Kai and British Chancellor of the Exchequer George Osborne meet the press after the 6th China-UK Economic and Financial Dialogue in London. XINHUA

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The sixth China-UK Economic and Financial Dialogue will strengthen bilateral ties and foster sustained growth of the financial services industry, a leading business leader from the United Kingdom said on Monday.

Mark Boleat, policy chairman at the City of London Corporation, said he was enthused by the fruitful outcome of the talks, particularly the UK government's plan to issue the first sovereign renminbi bond outside of China.

"This move is not just a symbolic move but will help lay the groundwork for the yuan's future as a major global currency, not just for trade and investment but also for sovereign reserves," he said.

"It reflects the market demand and further demonstrates the commitment from the UK government to support yuan internationalization and London's position as a leading offshore yuan center," said Boleat.

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His words came after British Chancellor of the Exchequer George Osborne announced the UK's intention to become the first Western country to issue a bond in Chinese currency during the sixth annual China-UK economic summit with Chinese Vice-Premier Ma Kai in London on Friday.

The renminbi bond will be used to add to Britain's foreign currency reserves, which hitherto did not contain the Chinese currency, said Osborne.

"The bond is intended to be a one-off issuance, with the benefit of contributing liquidity to the small but fast-growing renminbi offshore market and attracting other market players in both the private and official sectors," said Osborne.

The bond is expected to be launched within the next few weeks or months and proceeds will be used to finance the UK's foreign currency reserves.

Boleat noted that more remains to be done to develop the offshore yuan bond market, which in turn will encourage wider circulation of the yuan outside of the Chinese mainland, in tandem with Chinese financial market liberalization.

Other major achievements include China's largest commercial bank, the Industrial and Commercial Bank of China's new branch license in London. ICBC will be the first Chinese mainland bank to open a branch in the UK since 1949.

ICBC's branch license is "a result of recent changes in regulations to allow foreign-owned firms that meet the requisite standards to operate as branches in the UK," Boleat said, adding that this change is helpful for keeping London and the UK competitive.

Reciprocal measures were also agreed to open up financial markets, with Lloyds of London to open a Beijing branch soon.

Analysts said such moves will help further business and trade between China and the UK.

Ma said during the dialogue China and the UK need to deepen cooperation in trade and investment and develop a number of large projects with a powerful driving force.

The two nations should also make full use of their advantages and continually boost financial cooperation, Ma said.

Ma also met British Prime Minister David Cameron during his trip and said China was willing to enhance cooperation with the UK in nuclear energy, high-speed rail, finance and technology, and also inject new impetus into the comprehensive strategic partnership between the two countries.

Cameron said he was looking forward to improving the cooperation of some large-scale infrastructure projects with China, such as those in nuclear energy and high-speed rail.

The UK is already one of Europe's largest investors in China, and among the largest destinations in Europe for China's outward investment.