China promotes yuan trade, investment in Xinjiang

BEIJING, June 1 (Reuters) - China wants the yuan to play an active role in denominating trade and investment flows in its northwestern Xinjiang region, the central bank said in a statement on Tuesday.

The Chinese government has recently unveiled a series of policies to promote the development of Xinjiang, of which the central bank's announcement is the latest.

It also points to an expansion of trade-settlement trials using the yuan, intended to promote the Chinese currency's gradual internationalisation.

Xinjiang is bordered by eight countries, including India and Pakistan.

Xinjiang has long been a tightly controlled hotbed of ethnic tension, fostered by an economic gap between many Uighurs and Han, government controls on religion and culture and an influx of Han migrants who now are the majority in most big cities.

Xinjiang's economy grew by 8.0 percent in 2009, compared to national GDP growth of 8.7 percent. (Reporting by Zhou Xin and Simon Rabinovitch; Editing by Benjamin Kang Lim)