UK eases rules for Chinese trading

ICBC bank ICBC could be one of the banks to benefit from lighter regulation

Related Stories

Chancellor George Osborne has announced moves aimed at making London the main centre for Chinese financial business overseas.

Mr Osborne will loosen regulation to allow the move.

Under an £8bn pilot scheme, London-based investors will be able to apply for a licence to use the Chinese currency to invest directly in Chinese shares and bonds.

Until now, they have had to direct their investments via Hong Kong.

Start Quote

There is still a long way to go before the Chinese currency is sufficiently loosened from government control”

End Quote

Mr Osborne is also facilitating talks between Chinese banks and the UK banks regulator, the Prudential Regulation Authority, to allow them to establish branches for wholesale activities in London.

This would allow China's huge banks to conduct business in London with companies and financial institutions, but not to offer High Street services.

London is already the main overseas location for trading China's currency, known as the yuan or renminbi (RMB), with $5.3tn worth traded on an average day.

But strict rules on transparency and cash reserve requirements have forced China to base its three biggest banks in Luxembourg.

'Jobs for Britain'

Setting up the bank branches is good for China, as they would be able to operate under Chinese regulations.

Mr Osborne said: "A great nation like China should have a great global currency."

"Today we agreed the next big step in making London - already the global centre for finance - a major global centre for trading and now investing the Chinese currency, too."

Start Quote

This should reduce the costs of investing in China via London - although the sums involved in this initial pilot are small”

End Quote

He said the move would mean more trade, investment, business and jobs for Britain.

Discussions will begin between the Prudential Regulation Authority and Chinese banks in London.

The announcement is part of the chancellor's visit to China this week.

A joint statement from the two countries said both sides "welcomed this as an important step that cements London's major role as one of the most important global centres for RMB trading".

On Monday, the chancellor announced a simplified application process for Chinese tourists wanting to visit the UK while in Europe.

More on This Story

Related Stories

More Business stories

RSS

Features

From BBC Capital

Programmes

  • A factory in JapanThe Travel Show Watch

    Factory infatuation – why Japan’s industrial compounds are drawing large crowds at night

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.