Africa-China trade settlement denominated in the yuan totaled about $5.7 billion in 2012, or about 3 percent of annual trade. Looking at it from another angle, Africa constituted 5 percent of China's global trade that year, but its trade settlement in the yuan was just 0.2 percent of total in the Chinese currency, even after including Hong Kong. Thus, there is significant scope for growth. Since a major part of China-Africa trade consists of commodities, the big shift will come when commodities start being priced in the yuan instead of US dollars.

As the yuan gains acceptance as a trade-settlement currency, African central banks are likely to diversify their foreign exchange reserves to include the Chinese currency. The yuan is already part of central bank reserves in Angola, Nigeria, Tanzania, Ghana, Kenya and South Africa. As Beijing allows greater yuan convertibility (Standard Chartered expects full convertibility on the capital account by the end of this decade), it will become increasingly attractive as a reserve currency.

Trade is only the start of the current phase of the China-Africa story. As the partnership evolves, Africa is set to emerge as a key manufacturing base for China's top companies. Dim Sum bond issuance can be expected from African governments and some of the continent's biggest companies as they look to finance their investment plans. And before long, the yuan is also likely to become a core component of African central banks' reserves.

The author is chief executive officer of Standard Chartered China.

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