UK signed a deal with Hong Kong aimed at helping turn the City into an offshore trading centre for the renminbi.

UK team have agreed technical measures with Norman Chan, chief executive of the Hong Kong Monetary Authority, to help London play an important role in increasing the renminbi’s standing as a big global currency.

The two sides will set up a forum investigating synergies between the UK and Hong Kong, including looking at clearing and settlement systems, market liquidity and development of new renminbi-denominated products.

Explaining the deal, British Chancellor Mr Osborne said there was “a very specific opportunity for Britain” to benefit as the Chinese economy grows. “At the moment the renminbi is mainly being traded in and around China and Hong Kong and what I’m working on is making sure that London is the western trading centre for the Chinese currency” he told the BBC.

The chancellor argued that a more prosperous China would be beneficial for British goods and services, and that the government was explicitly trying to build new trade links with emerging economies such as China and India.

China has given its backing to London’s ambitions to become a significant offshore renminbi trading centre; Hong Kong is the world’s biggest offshore centre for the Chinese currency, acting as a gateway for the onshore market in mainland China.

The Hong Kong Monetary Authority recently announced that it was to extend the operating hours of its renminbi payments system by five hours so as to facilitate better offshore trading with London, extending the window through which financial institutions in London can settle offshore renminbi payments.

Total Chinese trade settled in renminbi has increased from 0.7 per cent in the first half of 2010 to more than 9 per cent in the first half of 2011. Renminbi deposits in Hong Kong have increased from Rmb64bn in January 2010 to Rmb627bn in November 2011.