Luxembourg is eager to expand financial collaboration with China and it will continue to grow as an offshore yuan market, its Finance Minister Pierre Gramegna said in Shanghai on Thursday.

To illustrate the increasing presence of Chinese financial companies in Luxembourg, Gramegna announced that Alipay would establish its European unit in Luxembourg.

Gramegna also said the Agricultural Bank of China is in the process of setting up its EU headquarters in Luxembourg. Bank of China, Industrial and Commercial Bank of China and China Construction Bank have already established businesses there.

"We are delighted to welcome Alipay to Luxembourg," Gramegna said. "This is a strong reflection of Luxembourg's position as a modern financial hub and a leading center for yuan transactions outside China."

Gramegna said the country has actively supported the internationalization of the yuan and looked forward to further developing its role in the financial sphere as a bridge between China and Europe.

The statement came in tandem with the release last week that China's central bank signed a memorandum of cooperation with its counterpart in Luxembourg on the establishment of a clearing bank for the yuan.

By the first quarter of this year, Luxembourg held 79.4 billion yuan (US$12.9 billion) in yuan deposits, the most in Europe. The figure increased 24 percent from the fourth quarter of last year.