Open gate for cross-border Rmb FDI flows
More new rules have been published that clarify the cross-border flow of Renminbi and they signal that China has formally opened the channel for cross-border and nation-wide Renminbi foreign direct investment
Issue: December 2011/January 2012
Keywords (click to search):
Rmb
cross-border
foreign direct investment
Han Kun
Since the launch of the pilot Renminbi (Rmb) settlement for cross-border trade in July 2009, the demand for Rmb foreign direct investment (RFDI) has skyrocketed due to the strong interest from foreign enterprises wanting to invest in Chinese companies and the eagerness of domestic enterprises for offshore investment and financing. Due to the narrow channel permitting offshore Rmb to flow back to the Mainland, offshore Rmb transaction hub Hong Kong has an urgent need to have widened channels for the backflow of Rmb. On June 3 2011, the People’s Bank of China (PBoC) promulgated the Circular on Clarification of Matters Relating to Cross-border Rmb Business (Yin Fa [2011] No.145) (关于明确跨境人民币业务相关问题的通知) (银发[2011]145号]) (Circular 145) to initiate the pilot RMB settlement programme for foreign direct investment and made clear that the RFDI includes investments for establishing new enterprises, merging domestic enterprises (other than reserve mergers), equity transfers and capital increases for current...
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