In an interview with Reuters, Guo said it was in American interests to see the yuan, also known as the renminbi, become a currency that is traded across the globe. He said that is largely because of the symbiotic relationship between U.S. purchases of Chinese goods and China's purchases of U.S. assets with the proceeds.
Guo, who is a former head of China's foreign exchange administration, said there should be "mutual cooperation" between the U.S. and China to promote China's financial sector and markets.
Guo, who was visiting New York to mark the upgrading of CCB's representative office in the city to branch status, said that the bond issues could be relatively small -- perhaps 1-3 billion yuan ($142 million-$436 million).
He said that developing the Chinese debt markets would help major U.S. companies such as General Electric Co, which needs to fund major investments in China, as well as institutions such as the World Bank, with major commitments there.
He said that foreign currency risk, particularly the risk that the yuan would continue to appreciate against the U.S. dollar as it has in recent years, could be hedged.
Last Wednesday, banking groups HSBC Holdings Plc and Standard Chartered Bank both said they were preparing for yuan-denominated bond issuance in China to help the country develop its local-currency financial markets.
The two are the first foreign banks to announce plans to issue yuan bonds in China since the Chinese government last month said it would open up issuance to locally incorporated overseas lenders.
China last month also granted permission to HSBC and Bank of East Asia to issue yuan bonds in Hong Kong.
China is stepping up efforts to increase the international status of the yuan and aims to develop Shanghai into a global financial center over the next decade, including allowing foreign companies to sell shares publicly in China.
Guo said he is confident that the yuan will become a global currency in the medium-to-long term. He said that China is likely to continue to progressively ease controls on the convertibility of the yuan, with cross-border direct investments one of the next targets.
He said that Beijing would be careful, though, to have in place some protection against speculation in yuan-related derivatives contracts
