China Confidential

AFP reported today that Beijing has agreed to allow foreign firms to issue yuan-denominated securities in China.

Under the securities agreement, China pledged to allow foreign invested companies to issue yuan-denominated stocks and bonds.

"There is clearly demand for ... any company doing business in China and investing in China to be able to finance yourself in renminbi," US Treasury Secretary Henry Paulson told reporters after the close of the semi-annual Strategic Economic Dialogue outside Beijing.

Paulson provided no timetable for introducing the change, saying only he expected it to be "rolled out gradually."

Other agreements reached this week include:

* China has agreed to tighter supervision of manufacturers of food and drug products following a spate of product safety scares in recent months.

* China has raised the investment quota for foreign institutional investors in China to US$30 billion from US$10 billion.

* The two sides will embark on a 10-year period of intensive cooperation on energy issues and the environment.

* China and the US pledged greater cooperation on developing biofuels, low-sulphur fuels and other low-pollution fuel sources.

* Cooperation on combatting illegal logging of timber worldwide to help protect forests and aid the fight against climate change, as trees help to absorb harmful carbon dioxide emissions.

The talks began on Wednesday.