China’s ICBC to set up offshore yuan center in Los Angeles

By Joseph Nordqvist

Los Angeles signed an agreement with China’s Industrial and Commercial Bank (ICBC) to create an offshore yuan center in California as a means of boosting cross-border yuan trade.

According to a statement by the ICBC, creating an offshore RMB center in the largest state of the US would help begin structuring a better yuan trade with China.

Many other countries have already set up offshore yuan trading hubs and the US is a little late to the show.

However, according to a Chinese bank executive, the reason behind this is that the US dollar is currently the world’s dominant currency and many American firms are reluctant to accept the yuan.

China wants its currency to be used by international investors and eventually make it into a global reserve currency.

Approximately 15 percent of Chinese trade was settled in yuan in the first nine months of 2014, a significant increase from only 1 percent in 2009.

ICB data indicates that in the first nine months of this year cross-border payments between the United States and China was over over 160 billion yuan.

The ICBC’s cross-border business was worth nearly 28 trillion yuan in the first nine months of 2014 – an 80 percent increase from the same period in 2013.

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For third straight month, China cuts US debt holdings

Jack Freifelder in New York (China Daily USA)

China cut its holdings of United States government debt in April for the third straight month, which may reflect a continuing move from US assets, according to an analyst.

China, the largest foreign holder of US Treasuries, held $1.26 trillion in US debt as of April, down $8.9 billion from the previous month and below the $1.27 trillion mark for the first time since August 2013, the US Treasury Department said Monday in a monthly report. China’s holdings hit a high of $1.317 triillion in November.

Kent Troutman, a research analyst at the Washington-based Peterson Institute for International Economics (PIIE), said the decreases each month could be due to benign shifts in the portfolio.

"April is the first month where there is a larger decrease, but it is still small. What is worth noting, however, is that, even if China’s holdings of US Treasuries are flat, its share of overall foreign exchange reserves is declining," Troutman wrote Monday in an email to China Daily.

"What we’ve seen in the past four months, if we accept that the data accurately reflects China’s true holdings of US assets, is the continuation of a shift that began in 2010 of diversifying their portfolio away from US assets," he said.

Japan remained the second-largest US creditor in April, increasing its debt securities by $9.5 billion to $1.21 trillion.

Foreign demand for US assets strengthened as net foreign purchases of long-term securities totaled $24.2 billion in April, compared to purchases of $4 billion in March, the data showed.


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