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Last updated: September 8, 2011 6:04 pm
Britain and China took fresh steps to improve their economic relationship on Thursday, agreeing to boost Chinese infrastructure investment in the UK and London’s role as an offshore trading centre for the renminbi.
Despite the strong differences that have emerged because of the UK’s criticism of China’s human rights record, British officials said there had been “good atmospherics” at a summit in London between Wang Qishan, Chinese vice-premier, and George Osborne, chancellor.
As the Financial Times reported earlier this week, Mr Wang’s visit marked the first time that China had given formal backing to moves by UK banks and financial institutions to develop the UK as an offshore financial centre for renminbi trading.
A joint statement by the Chinese and British governments stated that both sides “welcomed the private sector interest in developing the offshore [renminbi] market in London and the growth of the market to date. They agreed to monitor future progress, engaging in bilateral dialogue and dialogue with other authorities, as necessary, to support the market’s future development.”
However, the development of London as an offshore renminbi market is likely to be slow as the currency is not fully convertible, and Beijing has only recently launched a pilot project to develop its separately governed territory of Hong Kong as an experimental offshore renminbi market.
After the meeting, Mr Wang told journalists that the UK and China “need to deepen their co-operation in such fields as economy, trade, investment, finance, science, technology and tourism”.
Mr Wang also highlighted how both countries were making progress in the development of projects involving infrastructure, advanced manufacturing, new energy, energy conservation and environmental protection.
Mr Wang is almost certain to be promoted next year to the politburo standing committee, the highest authority in the country’s ruling Communist party hierarchy.
The once-in-a-decade leadership transition is likely to secure his position as the most senior official in charge of China’s growing financial sector.
“He has a strong financial background and a reputation as someone who is economically skilful,” said a leading China expert. “He understands the way markets work and he is a troubleshooter and problem-solver in the Chinese system.”
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