Prime Minister Julia Gillard.
Prime Minister Julia Gillard. Inga Williams

Aussie dollar the third currency traded in China's mainland

BUSINESS groups have welcomed news the Australian and Chinese currencies will be traded on the Chinese mainland for the first time.

Prime Minister Julia Gillard made the announcement in Shanghai on Monday, with Westpac and ANZ to become the first two banks able to offer a direct conversion between the yuan and Australian dollar.

At the moment the currencies are traded via the US dollar.

"The Australian dollar will be only the third major currency directly traded in China's mainland foreign exchange market, after the US Dollar and the Japanese Yen," Ms Gillard said during a speech to CELAP Shanghai.

"This reflects the rapid growth of our bilateral trade and the value of two-way investment - and it also creates opportunities for new financial integration."

Australian Chamber of Commerce and Industry chief executive Peter Anderson said it would provide a boost to exporting businesses dealing with our largest trading partner.

"Importantly, there is potential benefit not just to major resource industry investors, but also small and medium enterprises, such as Australian professional services companies," Mr Anderson said.

Business Council of Australia president Tony Shepherd the announcement would "further promote trade and investment between Australia and China, and this is very encouraging".

Meanwhile, Ms Gillard also announced details of a new campaign to promote Australian tourism, trade and investment opportunities in China.

Australia Week in China will be based in Shanghai and follows the success of the G'Day USA program.

Ms Gillard is leading the most senior Australian government delegation to ever visit China.