* Promotion of HK as offshore hub sees dim-sum bond flurry
* Yuan deposits in Hong Kong at 315 billion yuan at end-2010
By James Pomfret and Farah Master
HONG KONG, Feb 22 (Reuters) - The pace of the yuan's convertibility may accelerate as global demand grows for trade settlement in the Chinese currency, a Chinese central bank official said.
"If you look at the history and the progress of international use of our renminbi (yuan), you find that sometimes demand grows very quickly," said Xing Yujing, deputy director general of the monetary policy department of the People's Bank of China.
"If there's demand from the market in order to facilitate trade and investment, the change may be quicker than we imagined before," Xing told an economic conference held by Goldman Sachs in Hong Kong on Tuesday.
China is seeking to promote the use of the yuan overseas as part of a longer-term plan to make it an international reserve currency along with the U.S. dollar, analysts say.
Beijing's promotion of Hong Kong as an offshore yuan trading hub has resulted in a flurry of yuan-denominated corporate bonds also known as dim-sum bonds, banks creating new structured products, and more Chinese importers settling trade in renminbi.
Speaking at the same event, Hong Kong Monetary Authority Deputy Chief Executive Peter Pang said the growth potential for foreign direct investment (FDI) flowing into China from yuan bond issuance in Hong Kong was huge and could double from last year.
"Hong Kong's investment of $46 billion in 2009 accounted for nearly 50 percent of total mainland FDI. FDI in the mainland financed by renminbi bonds issued in Hong Kong was less than 2 billion yuan ($304.3 million) last year, or 1.5 percent of total mainland FDI, so the potential for growth is really huge," he said.
It would "almost double" the total issue amount of 46 billion yuan last year, he told the economic conference.
Yuan deposits in Hong Kong reached 315 billion yuan at the end of December last year, dwarfing the roughly 80 billion yuan of outstanding "dim sum bonds", a trend that is expected to continue to underscore the supply-demand mismatch.
Yuan shares listed in Hong Kong may be just around the corner with Cheung Kong (Holdings) Ltd's <0001.HK> yuan REIT expected soon. (Writing by Charlie Zhu; Editing by Chris Lewis)