This aerial panoramic photo taken on January 10, 2023 shows a view of the Lujiazui area of the China (Shanghai) Pilot Free Trade Zone in Shanghai, eastern China. [Photo/Xinhua]
As China steps up efforts to open up its financial markets, it is working to simplify foreign exchange-related procedures, thereby increasing the global appeal of renminbi-denominated assets.
The State Administration of Foreign Exchange (SAFE) is soliciting public opinion on a draft document that would eliminate early-stage payment restrictions on foreign direct investment and remove the dollar-denominated Qualified Foreign Institutional Investor (QFII) capital outflow requirement. Among the optimized procedures is his RQFII, its renminbi-denominated sibling.
According to SAFE, China has achieved varying degrees of opening up for more than 90% of the subcategories of capital account transactions compiled by the International Monetary Fund.
The country is currently pursuing two-way financial opening-up enabled by the Qualified Foreign Institutional Investor Scheme, direct market participation from foreign investors, and connectivity schemes such as the Shanghai-Hong Kong and Shenzhen-Hong Kong Equity Connect and Bond Connect programs. ing. And swap connect.
“The negative list regarding foreign access to the country’s financial services sector has largely been emptied, achieving pre-determined national treatment,” said Guan Tao, an economist at BOC International.
He said capital flows into financial markets have become smoother as quota restrictions on financial transactions have been eased over the years.
According to SAFE data, persistent efforts to open up the financial sector have contributed to attracting foreign investors, with foreign investors holding 1.8 times more mainland Chinese securities by the end of June 2023 than at the end of 2017. increased to
Overseas holdings of mainland Chinese bonds increased by more than 40 billion yuan (approximately US$5.6 billion) for the second consecutive month in October, bringing total holdings to 3.24 trillion yuan.
The introduction of a series of financial tools, such as this year’s Swap Connect regime, will provide more risk management tools for foreign investors, while also measures to facilitate cross-border trade and encourage investment in China’s capital markets. Wang said that it helped promote overseas participation. said Chin, an analyst at Golden Credit Ratings.
In the medium to long term, analysts believe that the investment value and risk-aversion capabilities of renminbi-denominated assets will further reassure overseas investors as economic growth and financial opening continue.
SAFE said it is strengthening foreign exchange-related policy support for the issuance of stocks and bonds in the domestic market and trading of shares of red chip companies related to Panda bonds.
He also expressed that he welcomes more foreign financial institutions and long-term capital to enter the Chinese market and expand their business in China through measures such as steadily advancing the pilot program for cross-border investment by equity investment funds. .