This is the first RMB note issued outside China and will help to develop an offshore market for the currency, as well as helping cross-border trade and investment, the central bank said, according to Xinhua.
The note is worth 5 billion yuan (US$787 million), with an interest rate of 3.1% and falls due in 2016, Xinhua said.
China is showing willingness to open up its financial sector and compete globally with this move, said Beijing-based finance and investment infrastructure expert Helena Chen of Pinsent Masons, the law firm behind Out-Law.com.
"China's intention to open up its financial services sector and compete on a global financial platform is clear as it makes its debut on the London stock market," Chen said.
"This move signals a stronger tie with the City of London and China’s willingness to open up its financial services sector. London is a financial powerhouse and it knows Chinese business so this move will no doubt position London as the leading offshore centre for RMB trading. The Chinese need London’s status and strong markets to compete across Europe and beyond," Chen said.
"With China's outbound trade and investment ambition, the issuance of RMB government debt in London could elevate the RMB to an attractive status for global investors," she said.
Christine Lagarde, the managing director of the International Monetary Fund (IMF), said in March that that the RMB is likely to be used more widely around the world in the aftermath of financial reforms.
Lagarde noted the "impressive efforts" made by the Chinese government in several areas: in strengthening its legal framework and its anti-corruption campaign; in curbing pollution; and "further participation in multilateral dialogue and … more international investment and trade," she said.
Chinese authorities have also expressed interest in having the RMB included in the special drawing rights (SDR) basket.
The SDR is an international reserve asset, created by the IMF in 1969 to supplement its member countries’ official reserves. Its value is based on the value of several international currencies – currently the US dollar, euro, yen and pound sterling.
The issuance of government debt in London is likely to help China in this, said Chen.
"It may increase the possibility for RMB be added to the SDR basket, which could in turn increase demand for holding RMB assets. We expect the IMF to conduct a review next month," she said.
The RMB became one of the world's top payment currencies early this year, according to figures compiled by the Society for Worldwide Interbank Financial Telecommunication (Swift).