Paris, Beijing work to boost French yuan investments

PARIS (Reuters) - Bank of China was appointed on Monday as a yuan clearing service in Paris and two French groups were awarded licences enabling them to invest in China's mainland securities, in moves to expand yuan markets.

Competition is fierce among Europe's major financial centres to trade in China's currency, the yuan, officially known as the renminbi (RMB), with Paris battling the likes of Frankfurt and London to capitalise on China's growing financial clout.

Coinciding with a visit to Paris by Chinese Vice Premier Ma Kai, France announced that BNP Paribas Investment Partners, the asset management arm of BNP Paribas, and Carmignac had become the first French firms to obtain authorisation to invest in China's mainland securities market via a RQFII licence.

Launched in 2011, the Renminbi Qualified Foreign Institutional Investor (RQFII) scheme allows financial institutions to use offshore yuan to invest in mainland stock, bond and money market instruments. It is one of the very few channels through which foreigners can tap these markets.

French Finance Minister Michel Sapin said he thought further authorisations would follow and Ma said the amounts French investors could plough into China via the RQFII might be raised.

"We would be happy to see, if needed, if we could increase France's 80-billion yuan (S$16.4 billion) quota," Ma said, speaking through an interpreter.

China's central bank had said earlier on Monday that it had appointed Bank of China, the country's main foreign exchange lender, as the yuan clearing service bank in Paris - the latest move by Beijing to expand the offshore yuan market.

The Paris-based Euronext exchange said on Monday Bank of China had issued an offshore bond in July, worth some RMB 2 billion, which was listed via a private placement. "The aim of the bond listing is to support business and financial development of euro zone companies active in China," Euronext said, adding the issue was oversubscribed 3.65 times.

In a sign of Europe's efforts to forge financial links with the world's second largest economy, Britain said last week it would become the first Western government to issue an offshore renminbi bond.

China's Ma also said that France and China would work to promote the international role of the euro and the Chinese currency.

"Both parties consider that we need a more balanced and more diversified international monetary system," he said.

Ma said the two countries had agreed to boost cooperation on nuclear, combustion fuel and uranium mining operations. France was one of the earliest investors in China's nuclear industry 30 years ago. French state-controlled utility EDF built the Daya Bay nuclear power plant in southern China, whose two nuclear reactors are based on a French design and started operations in 1993/94.

EDF is also a 30 per cent partner in two Areva-designed EPR reactors being built in Taishan, southern China. In March this year, Areva CEO Luc Oursel and China National Nuclear Corporation President Sun Qin signed a deal to increase cooperation on the treatment of used fuel and a recycling facility in China.