DAIMLER AG issued a pioneering Chinese currency bond that marks a significant step in China’s financial overhaul, and also helps China’s drive to give its currency a bigger global role.

    The German automaker sold 500 million yuan (US$82 million) in one-year “panda bonds” Friday, becoming the first nonfinancial foreign company to tap China’s domestic bond market.

    “This is small in relation to the [overall domestic] market ... but it is a milestone,” said People’s Bank of China Deputy Governor Liu Shiyu, speaking at a ceremony where the presence of a slew of regulatory officials signaled the deal’s importance to China.

    Foreign financial institutions such as the World Bank’s International Finance Corp. arm and the Asian Development Bank first sold panda bonds as long ago as 2005. China has also encouraged foreign companies to make use of the offshore yuan bond market in Hong Kong, where many raise cheap funds for their operations on the mainland.

    But the latest move makes clear that China wants top foreign companies to be able to meet their financing needs locally — and in local currency.

    China, seeking to overhaul its financial system, has vowed to open its capital markets to more foreign companies as part of a plan to gradually remove restrictions on cross-border capital movements.

    It also wants to boost the role of the yuan internationally and make it a reserve currency that could one day rival the U.S. dollar. (SD-Agencies)