China to set yuan clearing bank in Sydney

China will designate a clearing bank in Sydney for overseas trading of its yuan currency, a top Australian official said Thursday as Beijing seeks to make the tightly-controlled unit more international. The Australian financial capital would follow London and Frankfurt as a location for a Chinese bank to clear transactions in yuan, also known as the renminbi.
"I am confident that we will have, before the end of the year, a designated clearing bank for renminbi trading in Australia with the opportunity for an Australian bank to be a market maker," Australia's Treasurer Joe Hockey told the Australian Chamber of Commerce in Shanghai.
Beijing announced this month that the Bank of China would be the clearing bank for yuan dealings in Frankfurt while China Construction Bank won the bid for London.
Chinese authorities keep a tight grip on the value of the yuan and limit capital flows into and out of the country. But China - the world's second-largest economy - is gradually moving to implement financial reforms by making its exchange rate more flexible and opening its capital account for investment and financial transactions.
The yuan remained the seventh most used currency for global payments in May, transaction services organisation SWIFT (Society for World-wide Interbank Financial Telecommunication) said Thursday although it accounted for only 1.47 percent of the total.
"China has come a very long way in relation to the renminbi," Hockey told journalists. "In many ways they've moved faster to deregulate their currency than many other countries and that hasn't been properly recognised by a lot of the critics.
"The best way to handle the Chinese in relation to the renminbi is to offer to be there to engage in facilitating more active trading, greater liquidity in various markets," he said.
Some major trading countries, notably the United States, have criticised China's pace of reform as too slow and called for Beijing to let its currency float more freely.
Chinese President Xi Jinping is due to visit Australia in November for a summit of the G20 group of nations, and Hockey said the two countries hope to reach a free trade agreement before the end of the year.