Hong Kong, too, is playing a role.

State Council rules, issued in April 2009, to build Shanghai into a global financial hub by 2020 caused some angst in Hong Kong, as financial institutions there worried their premier role as the financial gateway to China's mainland might be usurped.

The Chinese government moved to ease those fears by measures including instituting closer cooperation in yuan trading between the mainland and the special administrative region.

On July 19, the People's Bank of China and the Hong Kong Monetary Authority signed a supplementary memorandum of cooperation on yuan business in Hong Kong, lifting all restrictions on Hong Kong banks offering yuan accounts and providing related services to financial institutions.

The yuan business in Hong Kong has been rising since February 2004, when China first allowed banks there to offer yuan deposits, remittances and currency conversions for Hong Kong residents.

"There's large room for a further development of the renminbi business in Hong Kong, despite the inconvertibility of the yuan," said Liao Qun, chief economist at CITIC Bank International. "Hong Kong is set to become a fully fledged offshore yuan market by 2020."

Xie Duo, director of the financial market department of the People's Bank of China, said China is encouraging the use of Hong Kong as an offshore market for the Chinese currency, with more companies allowed to issue yuan bonds in the city.

The central government has introduced several important initiatives in the past years to promote the development of the yuan business in Hong Kong.

In 2009, China allowed mainland subsidiaries of Hong Kong banks to issue yuan-denominated bonds.

HSBC China, Bank of East Asia China and other lenders have already issued bonds in Hong Kong for Chinese mainland development.

Last year, the Ministry of Finance issued 6 billion yuan (US$885 million) of sovereign bonds in Hong Kong, the first such issue in an offshore market.

The appreciation of the yuan since July 2005 is also adding to the yuan's popularity overseas.

"We can expect to develop a market in Hong Kong in which the yuan can be traded more actively, albeit in a restricted way, and hence the overall yuan business will be able to accelerate under the current conversion regime," Liao said.

Hong Kong Monetary Authority data showed that there are about 80 billion yuan of yuan deposits in Hong Kong, while economists said they expect the figure to grow to 200 billion yuan by the end of this year.