City to become yuan center

SHANGHAI / HONG KONG - Shanghai will become the global center of yuan trading, clearing and pricing by 2015, in line with a State plan to make the city an international financial hub by 2020.

Financial experts said the plan will not put the city in direct competition with Hong Kong, which is already the offshore yuan center. That's because the two cities will offer different yuan-based products and services to different clients.

The plan, jointly published by the National Development and Reform Commission and the Shanghai Municipal Government on Monday, sets out the main objectives for Shanghai to become a financial center. Key to those objectives is to raise the annual volume of trade in Shanghai's financial markets (excluding the foreign exchange market) to 1 quadrillion yuan ($158 trillion) by 2015.

In 2010, Shanghai's financial markets (excluding the foreign exchange market) registered a trading volume of 386.2 trillion yuan, 10 times of that in 2005.

The plan says the daily mid-point price published by the central bank in the onshore yuan market would be the benchmark for both domestic and foreign yuan trading markets, and the government-backed Shanghai Interbank Offered Rate, or Shibor, would be the benchmark for yuan credit everywhere.

China will also encourage overseas companies to sell yuan-denominated shares in its domestic stock markets, but no timetable has yet been released.

Shanghai will also strive to increase its influence in global financial markets, especially the yuan-product market, according to the plan.

By 2015, Shanghai's financial markets will witness a surge in the number of overseas investors and the growing global impact of its stock market's main indexes and commodities futures prices.