Top China banker calls for U.S. sales of yuan bonds
Sun Jun 7, 2009 4:06pm EDT
By Martin Howell
NEW YORK (Reuters) - A top Chinese banker on Sunday called on the U.S. government and the World Bank to sell yuan-denominated bonds in Hong Kong and Shanghai to encourage the development of debt markets in those centers and to promote the yuan as a major international currency.
"I think the U.S. government and the World Bank can consider the possibility of issuing renminbi bonds in the Hong Kong market and the Shanghai market," said Guo Shuqing, the chairman of state-controlled China Construction Bank (CCB), the world's second-biggest bank by market value.
In an interview with Reuters, Guo said it was in American interests to see the yuan, also known as the renminbi, become a currency that is traded across the globe. He said that is largely because of the symbiotic relationship between U.S. purchases of Chinese goods and China's purchases of U.S. assets with the proceeds.
Guo, who is a former head of China's foreign exchange administration, said there should be "mutual cooperation" between the U.S. and China to promote China's financial sector and markets.
Guo, who was visiting New York to mark the upgrading of CCB's representative office in the city to branch status, said that the bond issues could be relatively small -- perhaps 1-3 billion yuan ($142 million-$436 million).
He said that developing the Chinese debt markets would help major U.S. companies such as General Electric Co, which needs to fund major investments in China, as well as institutions such as the World Bank, with major commitments there.
He said that foreign currency risk, particularly the risk that the yuan would continue to appreciate against the U.S. dollar as it has in recent years, could be hedged.
Last Wednesday, banking groups HSBC Holdings Plc and Standard Chartered Bank both said they were preparing for yuan-denominated bond issuance in China to help the country develop its local-currency financial markets.
The two are the first foreign banks to announce plans to issue yuan bonds in China since the Chinese government last month said it would open up issuance to locally incorporated overseas lenders.
China last month also granted permission to HSBC and Bank of East Asia to issue yuan bonds in Hong Kong.
China is stepping up efforts to increase the international status of the yuan and aims to develop Shanghai into a global financial center over the next decade, including allowing foreign companies to sell shares publicly in China.
Guo said he is confident that the yuan will become a global currency in the medium-to-long term. He said that China is likely to continue to progressively ease controls on the convertibility of the yuan, with cross-border direct investments one of the next targets.
He said that Beijing would be careful, though, to have in place some protection against speculation in yuan-related derivatives contracts.
source: <a href='http://www.reuters.com/articlePrint?art ... QK20090607' target='_blank'>http://www.reuters.com/articlePrint?art ... 0090607</a>
ref links:
<a href='http://cn.reuters.com/article/chinaNews ... 1620090608' target='_blank'>http://cn.reuters.com/article/chinaNews ... 0090608</a>
yuan-denominated bonds 人民币（面值）债券、熊猫债券
promote the yuan as a major international currency 推动人民币成为国际货币
the world's second-biggest bank by market value 以市值计价全球第二大银行
……with the proceeds 中美共存的利益源于双方的往来活动，美方购买中国产品，中方购买美国资产（即美债）
China's foreign exchange administration 中国外汇管理局
upgrading of CCB's representative office in the city to branch status 将建设银行（位于美国纽约的）代办处升格为建行在美分行
hedge 防范风险
locally incorporated overseas lenders 本地化的外资银行，即得到中国授权可开办本地业务的银行
ease controls on the convertibility of the yuan 放松对人民币自由兑换的管制
cross-border direct investments 跨境直接投资，即海外直接投资
He said that Beijing would be careful, though, to have in place some protection against speculation in yuan-related derivatives contracts. 郭称北京方面仍当谨慎于防范人民币相关金融衍生工具的投机问题。