Overview

In a policy u-turn, the People's Bank of China and Ministry of Commerce promulgated the framework for Renminbi denominated foreign direct investment into China, as outlined in the Administrative Measures for Conducting Foreign Direct Investments in Renminbi'.

Previously, foreign direct investment into China had to be made in foreign currencies (primarily US Dollars) and a party seeking to make a foreign direct investment into China in Renminbi had to obtain prior regulatory approval on a case-by-case basis. The Hong Kong Monetary Authority has described the New Regime as an "important step" and expects the New Regime to greatly expand the use of Renminbi funds in Hong Kong and promote the development of the dim sum bond market. We believe the New Regime also bodes well for the offshore Renminbi loans market.

This briefing summarises the key points from the New Regime and outlines why it's an important step towards the internationalisation of China's currency.