A series of developments indicate that China is moving more quickly than anticipated to establishing a greater international role for its currency, the renminbi (RMB). The Bank of China, one of China’s “big four” banking giants, this week was authorized to bring RMB accumulated offshore back to the mainland. The authorized amount, about USD1.6 billion, will have little effect on the Chinese economy, but signifies China’s accelerating efforts to encourage the use of the RMB for trade settlement outside the mainland.

These funds are known as “dim sum bonds”–RMB-denominated debt issued outside the mainland, primarily in Hong Kong. China’s currency controls require issuers of this debt to undergo a lengthy approvals process to repatriate that RMB. Many estimate that only half of money from dim sum bonds flow back to the mainland. But China has been steadily encouraging offshore trading of the RMB in Hong Kong and Chinese banks have increased their issuance of dim sum debt in recent months.

If the RMB were to be used more widely in global trade and investment, the repercussions could be far reaching on the mainland and beyond the country’s borders. It could bring the RMB’s exchange rate closer to a fair value, thus eroding some of the advantages enjoyed by China’s mighty export sector. This, in turn, may herald a shift in China’s manufacturing base from the southern and eastern parts of the country–where labor costs are rising–to the country’s relatively undeveloped central and western regions.

The move could also result in interest rates that are set by the market, rather than by government fiat. Hong Kong has already emerged as a testing ground for financial reform. Although interest rates are set by the government in the mainland, the yields on RMB-denominated debt that trade in Hong Kong are set by the market.

Additionally, a fully convertible RMB could erode the supremacy of the greenback as the global reserve currency, though this development would take years, if not decades. An appreciation to the RMB could also benefit the US as well as the emerging-market nations that must compete with China to become centers of low-cost manufacturing.

The timetable of this transition remains impossible to predict. But Hong Kong will only strengthen its position as the financial gateway to China and the world’s RMB settlement center.

For more information about the RMB’s rise, subscribers should read the Wall Street Journal’s illuminating series on China’s currency.

Chinese officials on Tuesday said they hoped for a “major breakthrough” in negotiations with Russia over natural gas supplies. Russia and China have been working on an agreement to transport natural gas to China via a new pipeline. Such a deal would help China secure the resources vital to sustaining economic growth, while allowing Russia to diversify its customer base from Europe. A joint document signed in 2009 called for Russia to begin delivering gas to China in 2014-2015, and Russia’s Deputy Prime Minister Igor Sechin last week said that the country would deliver 68 billion cubic meters of natural gas per year to China for 30 years.

But, China and Russia have failed to come to terms over the pricing, and Russian gas export monopoly Gazprom said this week that it would not accept lower profits for the gas sent to China than what it receives for sales to Europe.

However, market analysts have said a deal could be likely before Chinese President Hu Jintao visits Russia next week.

Speaking at a news briefing, China’s Assistant Foreign Minister Cheng Guoping said, “Personally, I’m confident that if progress is smooth, then it’s quite likely that in the near future, and even before President Hu visits [Russia], both sides will achieve a major breakthrough in cooperating over natural gas.”

State media reported that construction has commenced on only 30 percent of the 10 million affordable housing units the Chinese government has targeted to build this year. The affordable housing program was meant to reduce social tensions from rising housing prices in China and Beijing has sought to tamp down speculation in real estate market with a cocktail of measures. However the central government and local governments have squabbled over how to fund these projects. The deadline for the start of construction of affordable housing projects is in end-October.