Beijing's decision to expand yuan business in Hong Kong is widely seen as another example of the central government offering support to the local economy. Making this and other announcements on easing trade with the mainland yesterday, visiting state leader Jia Qinglin presented them as moves to spur Hong Kong's economic development and co-operation with the mainland. To be sure, Hong Kong's position as an international financial centre will get a boost from mainland banks issuing yuan-denominated bonds here. Allowing Hong Kong importers to pay for mainland goods in renminbi will help local businesses recycle their earnings in yuan. Measures to relax market access for Hong Kong operators in 10 sectors will help them expand into the mainland. Beijing quite rightly gets credit for policies in the past three years tailored to help Hong Kong, such as dramatically increased tourist visits. But lest the public be led to think - erroneously - that Hong Kong is being kept afloat by Beijing's largesse, it needs to be pointed out that these measures are beneficial to the mainland as it slogs along the long march to reform. Far from being marginalised, the latest measures show that free-market Hong Kong continues to have an important role for China. With its foreign currency reserves now topping US$925 billion, China faces mounting international pressure to allow the yuan to appreciate and modernise its troubled financial system. US Treasury Secretary-designate Henry Paulson has promised to push Beijing to reform its troubled banks more quickly. Even without the external pressure, the large trade and capital surpluses are causing a headache for Chinese authorities, fuelling a property market bubble and undermining the authorities' ability to rein in growth. Allowing yuan-denominated bonds to be issued here and permitting Hong Kong importers to settle their bills in renminbi are tiny, but important, steps towards making the yuan an international currency. It is a step Beijing is taking with a good deal of hesitation. Until now, the mainland's monetary system has been shielded from volatility in the international financial markets by strict currency controls. Allowing the renminbi to become the clearing unit for trade with Hong Kong, limited though it may be, will lessen Beijing's ability to control the currency. So will issuing yuan bonds here. The two moves can be seen as Beijing using Hong Kong as a testing ground for the eventual free flow of the yuan. In the annals of China's economic development, they are historic milestones. For Beijing, there has been some indecisiveness over the yuan experiment here. Even after yesterday's announcements, details were lacking and there were calls for caution by mainland bankers. In fact, Hong Kong has always played a key role in China's interaction with the international economy. In the days when the country was closed to the outside world and the renminbi was worthless outside the mainland, Hong Kong was the nation's major source of foreign currencies. This was done through businesses on the mainland exporting to the city and getting paid in Hong Kong dollars or other hard currencies. After almost three decades of economic reform, the mainland no longer depends on Hong Kong as a major conduit for foreign trade. But the bulk of foreign direct investment into the country is still routed through this city because of our well-developed banking system and financial markets. Now, Hong Kong is set to serve the country by allowing the central government to see how the yuan will fare when it is exposed to international market forces. Hong Kong should welcome the trial - and handle it with care. Beijing's understandably cautious moves are an opportunity to again show the city's role as a well-staffed laboratory in the service of the mainland's reform experiments.