China seeks to leverage European debt to push renminbi agenda

Following last week's new deal on European debt, China is rubbing it down to Europe that borrowing in renminbi was likely to get it a sympathetic hearing from the world's largest creditor.

Already officially recognised by US  secretary of state Hillary Clinton as bankers to the world's biggest debtor, the Americans, the Chinese do not seem to relish the prospect of becoming the last-ditch lender to the Europeans.

The idea of renminbi borrowing was proposed by Beijing advisers and officials as a means of lowering Chinese foreign-exchange risks on greater exposure to Europe coupled with leveraging the Europeans' latest discomfiture to advance China's international monetary-policy agenda.

If it were to come about, it would set the stage for the US Treasury to issue renminbi-denominated paper, a momentous event in global monetary history.

Meanwhile, an interest-rate decision from the European Central Bank is on the cards as also the meeting of the Group of 20 leading economies in France next week.

Klaus Regling, the head of the European EFSF rescue fund, during his Chinese mission on Friday gave a lecture at Tsinghua University, wherein he did not rule out renminbi funding in future.