China to make Shanghai the global centre for yuan trading

Jan 30, 2012 12:00 AM

China will make Shanghai the global centre of yuan trading, clearing and pricing by 2015, according to a specific state plan laying out the city's future as an international financial centre.
The detailed plan, published jointly by the country's economic planning agency and the Shanghai government, shows the scale of China's ambition in creating its own version of New York, London or Hong Kong. China is aiming to transform Shanghai into an international financial centre by 2020 and analysts said the blueprint was likely a part of that longer-term scheme.

Currency traders said the statement by the National Development and Reform Commission (NDRC) was also a message from Beijing that the yuan's movements, which have increasingly been influenced by the offshore market over the past few months, would be decided by the government.
“There have been recent developments that have put Hong Kong's offshore market in the spotlight from time to time, such as its pricing of the yuan quite differently from the onshore market,” said a trader at a European bank in Shanghai. “In this sense, the NDRC statement is published at a sensitive time and means the government once again wants to emphasise that it has the final say in the value of the yuan.”

The NDRC envisions a trading hub with annual non-forex financial market trading volume of yuan 1,000 tn by 2015, up from less than yuan 400 tn in 2010.
The plan said the daily mid-point price published by the central bank in the onshore yuan market would be the benchmark for both domestic and foreign yuan trading markets, and the government-backed Shanghai Interbank Offered Rate, or Shibor, would be the benchmark for yuan credit everywhere.

China would also encourage overseas companies to sell yuan-denominated shares in its domestic stock markets, but the plan did not give a detailed timetable.
Authorities have been discussing launching a so-called “international board” of the Shanghai stock exchange for listing foreign companies' shares, but the city's mayor said this month that the time was not currently right for its launch.

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