To President Xi Jinping and Premier Li Keqiang, The issuance of RMB sovereign debt in London means rising momentum in longstanding efforts to make Renminbi a major international reserve currency in the near future. In this article, Dan Steinbock discusses how the economic potential of China’s bond market is stunning and how London hopes to consolidate a foothold as an offshore RMB centre that its rivals will find hard to match.
Actually, the first RMB debt issues in London – about RMB 2 billion of Renminbi bonds – have already been issued by the Chinese Development Bank. Last year, the UK government also issued a RMB 3 billion sovereign bond, which made London the first in the West to do so.
However, these moves were just a prelude for what Prime Minister David Cameron has described as the “golden year” of bilateral relations.
To Cameron and his Chancellor George Osborne, China’s RMB sovereign debt in London is a culmination of a longstanding effort to establish an edge over the US and European rivals in attracting Chinese investment. Chinese President Xi Jinping’s trip was preceded by Osborne’s visit to China last month, when he opened bidding for the £11.8 billion High-Speed Two (HS2) rail link contracts.
To President Xi Jinping and Premier Li Keqiang, the issuance of RMB sovereign debt in London means rising momentum in longstanding efforts to make Renminbi a major international reserve currency in the near future.
About the Author
Dr. Dan Steinbock is the research director of international business at the India, China and America Institute (USA) and a visiting fellow at the Shanghai Institutes for International Studies (China) and EU Center (Singapore). For more, see http://www.differencegroup.net