Investors have pumped billions of yuan into mainland projects since Beijing allowed the local currency to be used instead of US dollars for foreign direct investment. A total of 16.53 billion yuan (HK$20.11 billion) has flowed into 74 projects since the new FDI rule was implemented on October 14, Wang Chao, deputy commerce minister, told a Hong Kong business forum. Seventy per cent of funds have come from Hong Kong. This marked the first time figures on how many companies have chosen to use the yuan for foreign investment projects have been released. Most of the 74 projects were small, with only 13 valued at above 300 million yuan. Beijing is moving to internationalise the currency by removing restrictions on how the yuan is traded and used across borders. Wang said the mainland wanted Hong Kong to play a more active role as an offshore yuan trading centre. '[The city] has an [irreplaceable] role in the development of the yuan,' the minister said. Wang said the Ministry of Commerce was willing to hear views from different sectors on how to improve yuan trading rules. 'We will make it more convenient and transparent,' he said. Relaxing the rules is seen as an important step in boosting the international status of the currency and encouraging firms to issue yuan bonds or shares in Hong Kong to finance their mainland projects. Previously, companies mainly issued US dollar bonds since the regulation prohibited use of other currencies for direct investment. Since the new rules were introduced in October, foreign companies can use either yuan or US dollars to finance their mainland projects. That means they can borrow yuan or issue yuan bonds in Hong Kong and other markets. Wang said there were plans to allow investors to use offshore yuan and buy up to 20 billion yuan worth of stocks and bonds - through appointed mainland brokers - but did not give a timetable. Professor Chan Ka-keung, Hong Kong's secretary for financial services and the treasury, said the new rules would boost the city's status as an offshore yuan trading hub. In October alone, Hong Kong's yuan deposits reached 618.5 billion yuan, an amount Chan said would allow banks to offer yuan loans to investors. Andrew Fung Hau-chung, executive director and head of treasury and investment at Hang Seng Bank, expects more foreign investors to use the yuan, particularly as many analysts forecast the currency will slow its gains against the US dollar in 2012. When the yuan appreciates, companies prefer to use the US dollar to invest in mainland projects as they gain from the rising value of the currency in the long term, Fung says. But with many expecting the yuan to rise less than 3 per cent next year, more will probably use yuan. The currency has appreciated more than 20 per cent since 2004 but analysts predict the rally will end as mainland economic growth slows. Beijing still has capital controls and the yuan is not yet fully convertible, but the government has been easing its monetary policy as part of its long-term goal to make it an international reserve currency. Since mid-2009, Beijing has allowed selected firms to settle cross-border trade in yuan instead of US dollars. Further loosening of policy followed in July last year, when it allowed yuan-denominated bond issuance, funds and insurance.