China, Canada  Sign Currency Deal
World Economy

China, Canada Sign Currency Deal

Canada and China have signed a reciprocal currency deal that’s expected to dramatically boost exports.
The hub will foster far easier trade between the Canadian dollar and the Chinese yuan, also known as the renminbi. It makes Canada the first country in the Americas to have a deal to trade in the renminbi.
The signing of the deal was announced in Beijing by Premier Li Keqiang and Prime Minister Stephen Harper, who is on his third official visit to China, CBC News reported Saturday.
Authorized by China’s central bank, it will allow direct business between the Canadian dollar and the Chinese yuan, cutting out the middle man — in most cases, the US dollar.
Canadian exporters forced to use the American currency to do business in China are faced with higher currency exchange costs and longer waits to close deals.
“It’s something the prime minister has been talking about. He wants Canadian companies, particularly small- and medium-sized businesses, doing more and more work in China, selling goods and services there,” said CBC’s Catherine Cullen, reporting from Beijing.
Jason Henderson, head of global banking for HSBC Canada, calls the deal great news for Canada, given that China is the second largest economy in the world after the US.
If Canada is to maintain the standard of living that it enjoys today, he adds, it needs to tap into the Chinese market. The currency deal is the first step on that path.

  Currency Swap
The headline deal was an agreement between China’s and Canada’s central banks to a currency swap worth 200 billion yuan ($32.67 billion) or C$30 billion.
That will help set up a clearing bank, and allow the two banks to swap currencies if needed to ease trade and investment. The yuan clearing bank would be the first in the Americas, and allow Canadian financial institutions to use it to process payments for their customers in yuan.
Harper said deals also included an investment agreement in the sustainable technologies sector between Canadian-owned Airborne China Ltd and Heilongjiang InterChina Water Ltd to cooperate on air pollution reduction projects in China.
Canadian-owned Plasco China signed an agreement with Shougang Group to bring Plasco’s waste-to-energy technology to China. Canadian-owned Kryton International Inc and Beijing Maple Real Estate Company Ltd Group reached a deal to use Kryton International Inc.’s environmentally-friendly waterproof concrete technology and products in the Chinese company’s development projects.

  Trade Deal
Canadian and Chinese companies have signed trade deals worth more than C$2.5 billion, despite continued tension over the detention of two Canadians near the North Korean border.
Canadian Prime Minister Stephen Harper said the more than 20 commercial agreements signed between executives from both countries are expected to create more than 2,000 jobs in industries as diverse as aerospace, infrastructure, mining, energy and agri-food, World Bulletin reported.
In a speech earlier in the day to Canadian and Chinese business groups, Harper said Canada’s prosperity is rooted in both economic freedom and respect for the rule of law, democracy and human rights.

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