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Trade & Investment

Sydney vies to be latest offshore yuan market


SCMP’s George Chen says on June 28, “Australia‘s main financial centre is in talks to follow London and Singapore, and Beijing and Hong Kong are said to be receptive to the idea”.

An unidentified source says, “Beijing has made clear to Australian officials that although London has launched the first offshore yuan market outside Hong Kong, it doesn’t necessarily mean London has the exclusive right to do so.” “I think Beijing wants to see some competition”.

Australian Deputy Prime Minister Wayne Swan will visit Hong Kong in early July for the matter and is also expected to visit Beijing to discuss a wider range of issues including a free trade agreement with China.

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George Chen

Australia is holding preliminary talks with Hong Kong and Beijing about establishing an offshore yuan market in Sydney to serve the demands of growing Sino-Australia trade and boost the currency’s global standing.

The move came after London and Singapore announced plans to launch their own yuan trading centres. It also coincides with yesterday’s announcement that Beijing will further develop the offshore yuan market in Hong Kong as part of a new package of policies to mark the 15th anniversary of the handover.

Hong Kong was picked by the central government in 2009 as the first proving ground to settle cross-border trade in yuan outside the mainland market.

People familiar with the matter said officials in Hong Kong and Beijing had so far been co-operative with Australia over the move.

“The Chinese side has made it clear to Australian officials that although London has launched the first offshore yuan market outside Hong Kong, it doesn’t necessarily mean London has the exclusive right to do so,” said one of the people, who declined to be identified as he was not authorised to speak to the media.

“I think Beijing wants to see some competition [among different offshore yuan centres] that will help boost trading volume and thereby increase the importance of the yuan potentially as a new global currency.”

Australian Deputy Prime Minister Wayne Swan, who is also treasurer, is scheduled to visit Hong Kong in early July for a yuan-related forum where he will meet representatives from Australian banks and companies in Hong Kong to seek their advice on how the currency can play a more important role in bilateral trade.

Swan is also expected to visit Beijing to discuss a wider range of issues including the long-awaited Sino-Australia Free Trade Agreement (FTA) negotiations that began in 2005. Although there is no time frame for when a final FTA deal can be reached between the two countries, many financial and political analysts expect that it should not take long.

“Given the close trade relationship between China and Australia and its sophisticated financial infrastructure, Sydney has a natural advantage in becoming an offshore centre for the renminbi business,” said Dr Ligang Liu, chief China economist for ANZ, Australia’s third- largest bank.

China and Britain agreed last year to co-operate on developing London into an offshore yuan centre. Since then, London has been speeding up efforts primarily to serve the European market. Singapore is doing the same, but mainly with an eye on yuan trade in Southeast Asia.

China is already Australia’s largest two-way trading partner. Australia’s neighbour New Zealand signed an FTA deal with Beijing in 2008. If Sydney could serve as an offshore yuan market with a focus on Sino-Australian trade, it could also naturally cover trade settlement in New Zealand, market participants say.

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About chankaiyee2

Author of the book "Tiananmen's Tremendous Achievements" about how with the help of Tiananmen Protests, talented scholars with moral integrity seized power in the Party and state and brought prosperity to China. The second edition of the book will be published within a few days to mark the 25th anniversary of Tiananmen Protests All the parts in the first edition remain in the second edition with a few changes due to information available later and better understanding. There are also some changes for improvements of style. The new parts are Chapters 12-19 on events in China after the first edition was published: The fierce power struggle for succession between reformists and conservatives; Xi Jinping winning all elders’ support during his mysterious disappearance for 2 weeks in early September, 2012; and Xi Jinping Cyclone. Chan Kai Yee's new book: SPACE ERA STRATEGY: The Way China Beats The US An eye-opening book that tells the truth how the US is losing to China. The US is losing as it adopts the outdated strategy of Air-Sea Battle while China adopts the space era strategy to pursue integrated space and air capabilities: It is losing due to its diplomacy that has given rise to Russian-Chinese alliance. US outdated strategy has enabled China to catch up and surpass the US in key weapons: Hypersonic weapons (HGV) that Pentagon regards as the weapon that will dominate the world in the future. Aerospaceplane in China’s development of space-air bomber that can engage enemy anywhere in the world within an hour and destroy an entire aircraft carrier battle group within minutes. Anti-satellite (ASAT) weapons, anti-ASAT weapons, stealth aircrafts, drones, AEW&C, etc. The book gives detailed descriptions of China’s weapon development based on information mainly from Chinese sources that the author monitors closely. U.S. Must Not Be Beaten by China! China is not a democracy. Its political system cannot prevent the emergence of a despotic leader or stop such a leader when he begins to bring disasters to people. A few decades ago, Mao Zedong, the worst tyrant in world history did emerge and bring disasters to Chinese people. He wanted to fight a nuclear war to replace capitalism with communism but could not bring nuclear holocaust to world people as China was too weak and poor at that time. If a despot like Mao Zedong emerges when China has surpassed the US in military strength, world people will suffer the misery experienced by Chinese people in Mao era. China surpassing the US in GDP is not something to worry about as China has the heavy burden to satisfy its huge population, but China surpassing the US in military strength will be world people’s greatest concern if China remains an autocracy. US people are of much better quality than Chinese people. What they lack is a wise leader to adopt the correct strategy and diplomacy and the creative ways to use its resources in developing its military capabilities. I hope that with the emergence of a great leader, the US can put an end to its decline and remain number one in the world. China, US, space era strategy, air-sea battle, space-air bomber, arms race, weapon development, chan kai yee

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