Chinese rounding on Square Mile(2)

Another highlight of Gifford's China visit was attending the launch ceremony for the Shanghai office of London's bulk shipping exchange, the Baltic Exchange.

The exchange is already well known in China as the publisher of the daily Baltic Dry Index, which assesses the price of moving major raw materials by sea. It is used by many major Chinese commodity importers.

"The Baltic is the world's most reliable exchange. I think the opening of their Shanghai office is significant as it extends global maritime standards to China," he says.

It will also attract more Chinese shipping companies to join the exchange, helping them access global shipping markets more readily.

"To international shipping companies, it means greater facilitation, and greater knowledge, which helps people who want to buy and sell," he says. "It also helps the new Chinese members to be more international, because it acts as a mark of their quality."

Gifford also witnessed the expansion in China of the London Metal Exchange, which Hong Kong Exchanges and Clearing bought last year.

"(The acquisition) clearly means greater influence of Chinese companies on the London Metal Exchange - and that's great, because China is a major metal purchaser and seller," he says.

Gifford says an essential part of the Chinese financial industry's opening-up is the internationalization of the country's institutions. Having five Chinese banks gathered in London clearly represents progress.

"These banks learn a lot about international banking standards, which they can then bring back to China. This may relate to lending, credit cards, bond markets, foreign exchange, or whatever. So this process is one of harmonizing standards."

At the same time, he says, Chinese banks also contribute a lot to London through employment and tax, as well as helping to facilitate bilateral trade and investment between China and the UK.

They also help London's efforts to develop an offshore yuan market through educating businesses about how they can invoice trade transactions in the Chinese currency.

London's efforts to develop an offshore yuan market began in 2011 when the then Chinese vice-premier Wang Qishan had welcomed private-sector initiatives for such a market during his meetings with British Chancellor George Osborne.

Since then, Chinese and international banks have developed a range of yuan products in London and the city's yuan liquidity has grown quickly. To strengthen activities, the Chinese and UK central banks established a yuan swap line in June.

Gifford says much progress is visible in London's yuan development, but it is crucial to build up public awareness and the practice of invoicing in yuan for trade.

"People have to learn that they can invoice in another currency," he says. "The Chinese banks play an active role in telling companies how to invoice in the yuan."

He says this education is greatly needed in medium-sized and large businesses that are big enough to do trade with China but not big enough to fully appreciate the benefits of invoicing in yuan.

"We are actively working with corporates to persuade them," Gifford says of his team at the City of London. "We have programs and information we send to them to help them understand."

Gifford was born in St Andrews in Scotland in 1955. After graduating from Oxford, he joined the investment bank SG Warburg in 1978, and in 1982 joined the Swedish financial group Skandinaviska Enskilda Bank, becoming its UK country manager in 2000.

It was Gifford's role at SEB that first took him to China, where the bank only had a representative office.

He remarks that China's financial landscape is very different now, although further reform is yet to come.

"(China's speed of reform) is certainly reasonable. Therefore because it is reasonable, it is right. We would encourage it to come quickly, but if it comes too quickly it can produce mistakes," Gifford warns.

"It's a procedure which will take many years. As China grows, China will have an interest to bring in foreign investors and businesses. This will be easier if standards are the same."