Foreign investors urged to use renminbi in Hong Kong deals

China is encouraging foreign investors to use the renminbi or yuan for trade and investment in Hong Kong.

The move is the latest in a series aimed at internationalising the renminbi and positioning it as an alternative currency to the US dollar. Beijing has been trying to push for trade to be settled in renminbi rather than in US dollars as part of its plans to increase the global use of its currency.

The development of Hong Kong's offshore renminbi businesses grew rapidly last year. Total renminbi trade settlement value in Hong Kong increased more than four times over 2010, said the Hong Kong Monetary Authority.

As prime platforms for offshore renminbi trade settlement, Hong Kong's banks handled a record US$300 billion in such trade last year, up 419% from US$58 billion a year earlier.

China's Ministry of Finance said it will issue US$ 3.6 billion in renminbi -denominated sovereign bonds in Hong Kong as an effort to support the city’s sagging economy. The issuance is the fourth and largest of its kind.

Previous to this was the sale of RMB6 billion in yuan-denominated treasury bonds in 2009, RMB8 billion in 2010 and RMB 20 billion in 2011.