Banking

The yuan on Friday climbed to the highest level since 1993 amid growing foreign demand for a faster currency appreciation.

However, a senior Chinese official warned that if the yuan appreciates too fast, it could harm the world's economy, as well as China's.

The yuan was traded at 6.6830 against the greenback on Friday, advancing 2.2 percent since China removed its peg to the US dollar in June and pledged to add more flexibility to the yuan.

China is committed to moving toward a flexible exchange rate regime but "our approach will be a gradual one", said Yi Gang, vice-governor of the People's Bank of China, the country's central bank, at a forum during the annual meeting of the International Monetary Fund (IMF) and World Bank in Washington on Thursday.

Liquidity levels in the capital markets will improve and foreign exchange borrowing costs will reduce as more companies start settling cross-border trade with yuan, said analysts.

"There is a growing number of Chinese companies requiring their overseas business partners to use yuan in trade," said Ling Jiamin, a manager at Hong Kong-based Citigroup Inc.

HSBC Holdings Plc and Standard Chartered Plc have started yuan-settlement services such as channeling the yuan from abroad into the Chinese capital markets. To encourage usage, these banks offer incentives such as discount in transaction fees.

Ping An Insurance topped a list of China’s top 100 private-sector companies for 2009 released today by China Europe International Business School (CEIBS).

The report aims to give a glimpse into the performance of non-state-owned companies after the financial crisis and the increasing involvement of private companies in international capital markets.

Also in the top five in the ranking, in order, were retail chain Suning Appliance, appliance maker GD Midea, retail chain Gome Electrical Appliances and China Minsheng Bank. Numbers six and seven were electric car maker BYD – which is about 10% by Warren Buffett’s Berkshire Hathaway, and Fosun International – which invests in U.S.-listed companies such as Focus Media, Chindex International and Tangjitang Chinese Medicines.

As a worldwide symbol of globalization, it seems a fitting choice by China’s policy makers to select McDonald’s for its first bond sale.

McDonald’s announced on Thursday that it would be the first foreign, non-financial company to sell yuan-denominated bonds.

The Oak Brook, Illinois-based company will raise 200 million yuan ($29 million) with three-year bonds offering 3% interest.

Although the deal is far from a ‘Super Size’ transaction, it does mark another step in China’s efforts to relax its currency controls and perhaps eventually allow the yuan, or renminbi as it’s often called, to become freely convertible.