Central bank official says China keen to promote use of yuan in commodity pricing
Beijing studying ‘market rules and mechanisms to meet demand from investors’ deputy head of monetary policy committee says
China is keen to raise the profile of its currency in the pricing of commodities, according to a central bank official.
The country is studying the “market rules and mechanisms of pricing commodities in yuan [to] satisfy demand from domestic and overseas investors,” Pan Hongsheng, deputy secretary general of the People’s Bank of China’s monetary policy committee, was quoted as saying by the official China Securities Journal.
Pan’s comments, made on Monday at an international oil and gas conference in Hangzhou, capital of eastern China’s Zhejiang province, came as China is about to launch a yuan-denominated crude oil futures contract in Shanghai that has been almost seven years in the planning.
The contract, which would be the first to be priced in the Chinese currency, would give China a greater say in the pricing of crude traded in Asia and be a step forward for Beijing in its bid to unseat the US dollar as the de facto commodity trading currency.
Given China’s leading role in the trade of many commodities, the country had “good economic foundations and conditions” for more of them to be priced in yuan, Pan said.
China is the world’s largest importer of crude oil, iron ore and other raw materials. The more than one billion metric tonnes of iron ore it bought last year represented more than half of the global seaborne trade.