DUESSELDORF, Germany (Reuters) - A decision by Germany and China to make Frankfurt a European hub for financial transactions in the Chinese currency will give new momentum to trade between the two economic powers, Chinese President Xi Jinping and a German minister said on Saturday.
In a speech to politicians and business leaders in the city of Duesseldorf, Xi said setting up the hub for the renminbi in Germany “represents an important step on the road of the internationalisation of our currency,” according to a translation.
The Bundesbank and the People’s Bank of China signed an agreement on Friday to facilitate transactions in the Chinese currency in Frankfurt and to cooperate more closely in clearing and settlement arrangements of renminbi payments.
Up to now, transactions in China’s currency, the renminbi or yuan, have been impractical for all but very large European companies that are able to involve China’s central bank in a deal, because the renminbi is not freely convertible.
German Economy Minister Sigmar Gabriel said having the clearing bank in Frankfurt would help trade between the two economic powers.
“Our goal is an economic partnership of equals,” Gabriel said.
The Chinese leader’s first visit to Germany since becoming president last year saw the signing of business deals that will add to trade that was worth about 140 billion euros last year.
Annual trade flows between China, the world’s second-biggest economy, and Germany, Europe’s largest, exceed Chinese trade with France, Britain and Italy combined.
Xi said China would pursue its course of reforms but would not simply follow the “old road of the industrial nations” but would rather embrace sustainable development, even if this meant slower growth.
He said Germany and China could intensify their relationship by buying stakes in each others’ companies and said trade disputes should be resolved through dialogue.
Xi, accompanied by a 200-strong business delegation, travels to Brussels on Sunday.
Writing by Madeline Chambers; Editing by Angus MacSwan