China will promote yuan's internationalisation, central bank says

FILE PHOTO: A China yuan note is seen in this illustration photo May 31, 2017. REUTERS/Thomas White/Illustration/File Photo

BEIJING (Reuters) - China will make it easier for foreign investors to use the yuan to invest in Chinese bonds and stocks as it pursues the currency’s internationalisation, the central bank said on Friday, amid rising tensions with the United States.

“In the future, we will continue to steadily promote the yuan internationalisation to serve the real economy, based on market principles,” the People’s Bank of China said in its 2020 yuan internationalisation report.

Fears in China of a deepening financial war with the United States have fuelled calls to bolster the yuan’s global clout as Beijing looks to decrease reliance on the greenback.

China will make it easier for foreign investors to use the yuan to invest in Chinese bonds and stocks and will promote the development of offshore yuan markets, it said.

The central bank expects the yuan to play a bigger role in pricing and settling commodities trade, including crude oil and iron ore, it said.

Cross-border yuan settlements reached 19.67 trillion yuan (2.16 trillion pounds) in 2019, up 24.1% from a year earlier, the central bank said.

Last year’s cross-border yuan settlements accounted for 38.1% of the overall cross-border settlements, it added.

Cross-border yuan settlements in foreign trade grew 16% last year, accounting for 13.4% of the total cross-border trade settlements, the central bank said.

The central bank will step up monitoring of cross-border capital flows and use its counter-cyclical policies to ward off potential risks from cross-border capital flows, it said.

Reporting by Judy Hua and Kevin Yao; editing by John Stonestreet, William Maclean