Luxembourg Pursues Offshore Trade in China's Yuan

Officials at the Luxembourg Stock Exchange keep enamel pins pairing the Luxembourg and Chinese flags to wear at events celebrating yuan-denominated bond listings, which hit 30.6 billion yuan in volume when Bank of China Ltd. 601988.SH +0.77% raised 1.5 billion yuan in May. At the Association of the Luxembourg Fund Industry, information packs and wall posters have been translated into Mandarin. Local legal and accounting firms and even the financial regulator, the CSSF, say they are hiring Chinese speakers.

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At the end of [recent Luxembourg delegation meetings to China], China signed a clutch of agreements that should lead to the establishment in Luxembourg of a yuan clearing bank and bring more China-related funds, bonds and stocks to the country. Meanwhile, three of China's six biggest banks have set up European headquarters in the area locals call Luxembourg city's "mini Wall Street," and two more announced plans in the past few weeks.

At China Construction Bank Corp., which got its Luxembourg banking license last year, European chief Suosheng Li can look out from the bank's glass-and-steel headquarters building onto the three round towers of Fort Thungen, an 18th century citadel that is one of the city's main landmarks. CCB's nine-story office block is mostly empty right now, but the bank aims to fill it with staff who will help bring Chinese companies to Europe and serve China-focused European customers, Mr. Li said.