Business / Markets

Luxembourg woos China for yuan business

By Cecily Liu (China Daily) Updated: 2014-03-17 03:16

Other European centers such as Paris and Frankfurt have also been growing their renminbi trade settlement and trade finance capabilities.

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Currently about 10 percent of Sino-French trade and Sino-German trade is settled in France and Germany, according to statistics from the French central bank Banque de France and Frankfurt Main Finance, a financial association that represents major German banks.

Bernard Poignant, China adviser at Paris Europlace, an organization responsible for coordinating and developing the Paris financial marketplace, says the growing use of renminbi for trade transactions demonstrates "concrete efforts to promote the use of renminbi with French customers dealing with China" by French banks.

"Our goal is to increase the percentage of commercial trade in renminbi. Many small and medium-sized businesses will not know about this option and its benefits if we don't explain it to them," Poignant says.

Poignant's views are echoed by Lutz Raettig, chairman of the supervisory board of Morgan Stanley in Frankfurt, who adds that German banks are working hard to ensure sufficient renminbi liquidity to facilitate the growing renminbi trade flow.

Globally, renminbi usage in international trade finance grew to 8.66 percent in October 2013, from just 1.89 percent in January 2012, according to Society for Worldwide Interbank Financial Telecommunication figures.

This milestone made the renminbi the second-most-used currency for trade finance internationally, behind the US dollar, which has a share of 81.08 percent. About 18 percent of China's global trade is now denominated in renminbi, compared with less than 1 percent nearly four years ago.