Chinese Yuan Currency
London is seeking to become an offshore hub for business transactions in China\'s yuan currency (Reuters)

London has reinforced its position as the offshore hub for Chinese yuan trading after Standard Chartered revealed that it will start clearing services in the capital in cooperation with the Chinese Agricultural Bank.

The announcement is a landmark move for Britain's financial services industry, as it will allow market participants to transact and clear products in yuan, without having to hive off part of the trading lifecycle to Asia.

"London's position as a leading international financial centre is enhanced by the ability to offer onshore clearing services that allow on-demand access to settle renminbi (RMB) denominated services within the London time zone," said Peter Sands, group CEO of Standard Chartered, in a statement.

"The opportunity to boost RMB liquidity in London could be used to fund large investment projects and support the development of other financial activities."

China has aimed to liberalise its currency over the past few years which means financial products, including bonds, foreign exchange and funds, could be transacted in RMB outside the mainland and Hong Kong.

Meanwhile, British policymakers have strengthened ties with China, in a bid to boost the fragile economic recovery and secure future investments.

In October, Britain inked a ground-breaking deal with China that allows the Industrial and Commercial Bank of China (ICBC) to issue a renminbi bond in London next month.

In the same month, the UK government revealed that it sealed a number of deals, ranging from major nuclear investments, to relaxing rules for China's banks setting up shop in the UK.

David Cameron's Benchmark Trip

The announcement coincides with the Prime Minister David Cameron's 120-strong delegation to China in a bid to future secure a benchmark trade deal with the economic superpower.

British business chiefs and politicians have made overtures to China this year as they seek to improve Britain's ties with the world's second-largest economy.

On the same day, Ernst and Young issued a report which called on British businesses and government to make reforms that would boost UK exports to fast-growing emerging markets.

The UK government sees China as a vital trade partner if it is to meet its own £1tn (€1.21tn, $1.64tn) target value for exports by the end of the decade, as it seeks to rebalance the economy away from debt-driven consumption.

The value of UK exports to China hit a £1bn monthly average for the first time ever at the beginning of 2013.

Cameron is due to attend the official opening of a new academy in Beijing for training technicians, salesmen and service staff for Jaguar Land Rover, which is signing a £4.5bn agreement to provide 100,000 cars to the National Sales Company over the next year.