China’s president promotes closer economic ties during UK visit

BOFIT Viikkokatsaus / BOFIT Weekly Review 2015/44

During his visit to the UK last week, president Xi Jinping focused on deepening economic cooperation and promoting international use of the yuan. The UK wants to see London become the West’s main hub of yuan exchange.

In connection with Xi’s visit, the PBoC issued in London its first offshore bond ever, a 1-year bond worth 5 billion yuan ($790 million). The bond issue was well received by the market, with demand far exceeding supply. Earlier this month, two Chinese banks (Agricultural Bank of China and China Construction Bank) also issued yuan-denominated bonds in London. The PBoC’s successful bond issue should encourage other Chinese banks to seek yuan-denominated financing in London.

The visit included deals on several major Chinese investments in the UK energy sector, health care, car manufacturing and the entertainment industry. The single largest investments were from China’s state-owned China General Nuclear in two nuclear power plant projects in England.

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