Geoffrey Yu, executive director and foreign exchange strategist at UBS Limited, told Xinhua: "The UK is indeed pitching to become the global hub for renminbi trading, though I question whether they have thought the process through. The UK has been seen as behind the curve in establishing a close economic relationship with China, and I get the feeling that in trying to get to the front of the queue the government is giving away a bit too much. There are very deep structural reasons as to why the UK lags Germany and other countries in a trading relationship, but they are not being addressed."
"Britain has some of the most investment-friendly policies in Europe and a vociferous advocate of free trade, which serves China's interests. Given the UK's large current account deficit and debt burden, foreign financing for domestic capital projects are more than welcome. There are many opportunities, not just for investment, but also to learn from the UK, at very little risk because of the mature nature of Britain's economy and its legal system which protects investors' interests," he added.
Qinwei Wang, China economist at Capital Economics, a London-based economy analysis company, told Xinhua the latest foreign exchange reserve data for the third quarter of this year suggested China had continued to accumulate foreign exchange reserves last quarter with the pace probably accelerating over the last few months.
"Given recent uncertainty in the global financial market, China has incentive to diversify its investment from the US treasury. Infrastructure investment in Britain appears to be a good option," he added.
Capital Economics expects the renminbi exchange rate to edge up higher over the next couple of years, reaching renminbi 6.10 against the US dollar this year and renminbi 6 against the dollar by the end of the next year.
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