China gives France a quota for investing in its capital markets
HONG KONG, March 28
HONG KONG, March 28 (Reuters) - China has granted French financial institutions a quota of 80 billion yuan ($12.88 billion) for investing in China's domestic capital markets, a move likely to intensify competition among European cities to be major offshore yuan centers.
The granting to France of the quota for China's renminbi Qualified Foreign Institutional Investor (RQFII) programme is an incremental step to promote the Chinese currency to foreign investors beyond Hong Kong.
At present, more than 80 percent of yuan trade settlement is handled in Hong Kong.
"France welcomes the 80 billion yuan RQFII quota, and the two countries will continue discussions on setting up yuan clearing and settlement service in Paris," the French and Chinese governments said in a joint statement.
China is seeking to expand the yuan's footprint globally, aiming to have the status of its currency on par with the U.S. dollar.
There is stiff competition among European financial centres for yuan trading, with Frankfurt and Luxembourg vying with London to become the top destination.
Britain and China will sign an agreement next week to set up the first clearing service for renminbi trading outside Asia, putting London in a prime position to offer yuan trade business in Europe.
The RQFII programme, launched in 2011, allows financial institutions to use offshore yuan to invest in the Chinese mainland's securities markets, including in stocks, bonds and money market instruments.
Hong Kong has the biggest size of RQFII, at 270 billion yuan, followed by 80 billion yuan for the UK and 50 billion yuan for Singapore. ($1 = 6.2130 Chinese Yuan) (Reporting by Michelle Chen; Editing by Richard Borsuk)
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