China's biggest yuan-denominated international fund was set up in Shanghai yesterday as the city goes all out to ride on the internationalization of the yuan and help companies go aboard.
The 50 billion yuan (US$7.9 billion) fund, run by Sailing Capital International, is expected to leverage more than 150 billion yuan of investment capital through coordination with banks, the company said.
It offers a professional investment platform for institutions ambitious to invest aboard. It also expands the landscape of the local currency as yuan will be prioritized to be used in the pricing, transaction and settling of projects.
Sailing Capital has been set up by Shanghai International Group, the investment affiliate of the Shanghai government, and state-owned enterprises and private companies.
"The yuan-backed fund will help domestic companies go aboard in seeking more investment opportunities," said Liu Shiyu, deputy governor of the People's Bank of China. "The rapid development of cross-border yuan business in recent years has laid the backbone for capital like Sailing's to sail along."
The central bank will keep supporting Shanghai to be at the forefront of rolling out more financial innovations, Liu said.
The new fund is established amid a growing number of outbound investments made by Chinese companies backed by the country's robust economy, and is a key step for Shanghai to consolidate its ambition to become a global financial center by 2020 and a dominant yuan center by 2015.
The central bank first allowed companies to use the yuan in outbound direct investment in January last year in a bid to expand use of the currency overseas.
Last year, China's outbound direct investment in the non-financial sector hit US$59 billion, up 36.3 percent year on year, the Ministry of Commerce said last month.
Shanghai is expected to become the global center for yuan trading, clearing and pricing by 2015, according to a central government blueprint.
"The fund will help attract capital from home and aboard to participate in Shanghai's financial market and accelerate the city's rise-up as an influential yuan hub," said Tu Guangshao, a deputy mayor in charge of supervising the city's financial sector.