China and Canada in advanced talks to set up first North American renminbi trading hub
China and Canada are in advanced talks to set up the first North American renminbi trading hub and could announce a tentative deal as soon as Saturday while Canadian Prime Minister Stephen Harper is in China, according to people familiar with the matter.
Some hurdles remain before a final deal is struck, these people said, including determining which Canadian banks would participate. A renminbi hub, which must have the backing of the Chinese government, allows for the clearance and settling of transactions in the Chinese currency.
Canadian banks have been among those pushing for such a hub, which would lower financial costs for Canadian firms doing business with China, likely boost trade ties between the two countries, bolster Canadian banks’ foreign-exchange operations and allow Canadian institutional investors to add more renminbi-based assets.
China is Canada’s second-largest single-country trading partner, with two-way merchandise trade between the two countries reaching roughly 73 billion Canadian dollars ($63.89 billion), second only to trade between Canada and the U.S.
As of Friday, no formal deal had been reached, according to the people familiar with the matter, adding there was no guarantee that Mr. Harper would leave China with a commitment for a Canada-based hub. The announcement could involve a memorandum of understanding between the two countries to eventually reach a firm deal on establishing a hub, they said.