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A 100 yuan banknote.PETAR KUJUNDZIC/Reuters

British Columbia has begun drumming up support in Asia for a dim-sum bond issue that could come as early as January, a move that could feed about $80-million into its coffers while showing moral support for the Chinese government's efforts to internationalize its currency.

A team including an assistant deputy minister from British Columbia's ministry of finance met counterparts at China's Ministry of Finance and the People's Bank Monday morning, followed by a Chinese media briefing before continuing on to Hong Kong, where they hope a bond issue of at least 500-million yuan (about $80-million) could come as early as next month.

The move, if it goes ahead, would make British Columbia the first foreign government to invest in the offshore yuan-denominated bond market. Multi-national corporations including Caterpillar Inc. and McDonald's Corp. as well as the World Bank and Asian Development Bank have issued bonds in the offshore, or CNH, market in the last 18 months.

"The province's interest in the CNH market stems from a number of factors. It includes our confidence in the importance and emergence of China, and the internationalization of the renminbi [China's currency, also known as the yuan]. China is the second-largest economy in the world and will be the largest in five years according to the IMF. This is transformational, and bears recognition," said Jim Hopkins, the assistant deputy minister in the provincial treasury of B.C.'s Ministry of Finance, after briefing major Chinese media on the province's plans. "From a Treasury perspective, the end game is that we want to diversify the investor base for the province's bonds and get access to a new source of global liquidity."

The idea surfaced during meetings with Chinese banks and state-owned enterprises during a Canadian premiers' delegation in September. Now, provincial officials hope being the first foreign government to enter the market will give them a competitive advantage.

"There are advantages to being the first mover. We get early name recognition, there will be recognition from the investors, so that's a good thing to do," Mr. Hopkins said.

The move would mark a major step toward the Chinese currency's de-facto normalization, as the country's government comes under pressure to open its capital accounts and allow its currency to fluctuate more freely. The yuan has gained strength in recent weeks following the revelation of China's new inner circle of leaders after last month's 18th Communist Party Congress and renewed hopes for stronger financial reforms.

The offshore yuan market has also gained momentum after flagging earlier this year; in one striking example, the Chinese real estate firm Beijing Capital Land sold a three-year bond last month priced at 7.6 per cent, which was nine times oversubscribed, news agencies reported.

"I understand there are several foreign governments trying to tap into this market, because everybody wants to be first in this market," said Ivan Chung, vice president and senior credit officer at Moody's Investor Service in Hong Kong, who said there is public relations appeal for the first government to step up into a market which the Chinese government wants to become fully international. "The issuance by the province of British Columbia may be symbolic but it's important in the future, and one of the important markets in which they have funding."

Mr. Hopkins yesterday said the bond issue, which is being handled by HSBC, is still subject to market conditions and investor response; meetings with major potential investors have been set for Hong Kong, where the globally-issued bond would be anchored, and Singapore, a second emerging centre of the offshore yuan market. Bonds would be issued for no more than five years – a nod to expectations of the yuan's appreciation – and the province's proceeds converted into Canadian dollars.