A decision by Germany and China to make Frankfurt a European hub for financial transactions in the Chinese currency will give new momentum to trade between the two economic powers, Chinese President Xi Jinping (習近平) and a German minister said on Saturday.
In a speech to German politicians and business leaders in the city of Dusseldorf, Xi said setting up the hub for the yuan in Germany “represents an important step on the road of the internationalization of our currency,” according to a translation.
The Bundesbank and the People’s Bank of China signed an agreement on Friday to facilitate transactions in the Chinese currency in Frankfurt and to cooperate more closely in clearing and settlement arrangements of yuan payments.
Up to now, transactions in China’s currency have been impractical for all but very large European companies that are able to involve China’s central bank in a deal, because the yuan is not freely convertible.
German Federal Minister of Economics and Energy Sigmar Gabriel said having the clearing bank in Frankfurt would help trade between the two economic powers.
“Our goal is an economic partnership of equals,” Gabriel said.
The Chinese leader’s first visit to Germany since becoming president last year saw the signing of business deals that will add to trade that was worth about 140 billion euros (US$192 billion) last year.
Annual trade flows between China, the world’s second-biggest economy, and Germany, Europe’s largest, exceed Chinese trade with France, Britain and Italy combined.
Xi said China would pursue its course of reforms, but would not simply follow the “old road of the industrial nations,” but would rather embrace sustainable development, even if this meant slower growth.
The Chinese leader said Germany and China could intensify their relationship by buying stakes in each others’ companies and said trade disputes should be resolved through dialogue.