Canada has struck a deal with China to set up a yuan clearing hub in the country to clear and settle transactions in the Chinese currency.

The hub would likely be based in Toronto and is expected to benefit small or medium-sized businesses seeking for competitive advantages in dealing with China.

Sources said that the establishment of the hub is expected to be announced during Prime Minister Stephen Harper’s trip to China later this week.

The move comes in line with Beijing’s strategy to promote its currency to more international investors as well as boost China’s political and economic clout.

Canadian Chamber of Commerce estimated that the hub could generate as much as $32bn in additional exports in the next 10 years. The hub will also expand the country’s relationship with China and boosting trade.

A Yuan clearing bank will manage all parts of a transaction from when a commitment is made until the deal is settled. It will also reduce costs of doing business for Canadian companies seeking Chinese markets and save the time taken for trading.

A renminbi trading hub is a centre that completes RMB transactions, with the financial infrastructure for settlement and clearing and with sufficient liquidity to handle large transactions at a stable and predictable exchange rate.