Cross Border RMB Direct Investment Before Gate &Nbsp; First Heard The Stock Market Banned.

On the evening of August 22nd, the Ministry of Commerce issued a notice on the issue of cross border RMB direct investment (Draft).

In combination with the news of Hongkong's HKMA, which was called RMB FDI or published in the year, the signs of cross-border RMB direct investment were obvious.

The central bank yesterday (August 23rd) also announced that

It is worth mentioning that the draft opinion requires that cross-border RMB should not be used directly or indirectly for investing in Securities and financial derivatives in our territory, which means that if the funds are run in compliance with regulations,

Prohibition of investment in Securities and derivatives

The concept of "cross border RMB direct investment" is explicitly defined in the draft opinion. It refers to foreign investors' direct investment activities in China, which are legally obtained by foreign investors in accordance with the law.

The draft explains in detail the "lawful acquisition of Renminbi abroad". It mainly refers to two types of Renminbi: first, the renminbi acquired by foreign investors through legal channels abroad, including, but not limited to, the renminbi obtained through cross-border trade RMB settlement, overseas issuance of RMB bonds or stocks; two, the renminbi gains earned by foreign investors from China's foreign investment enterprises and the RMB profits from foreign exchange, capital reduction, liquidation and prior recovery.

For the scope of direct investment, the draft not only requires compliance with relevant laws and regulations, but also puts forward "not to directly or indirectly invest in marketable securities and financial derivatives, as well as to entrust loans or repay domestic and foreign loans."

Relevant experts say that such investments have deviated from the basic functions of FDI. There may have been many funds to hit the ball before, and trade and FDI came in to invest in capital markets.

Cao Honghui, a deputy director of the National Development Bank Research Institute and a researcher at the Financial Research Institute of the Chinese Academy of Social Sciences, pointed out that the opening of accounts for related securities should be implemented in the case of QFII, but it is difficult to complete control at the same time.

In addition, the audit level has also been clearly defined.

Cross border RMB direct investment, which is examined and approved by the local commercial authorities and belongs to the 4 category, must be reported to the Ministry of Commerce for examination and approval.

These 4 situations are: the amount of RMB investment is 300 million or more than 300 million yuan; financing guarantee, financing lease, micro credit, auction and other industries; foreign investment companies, foreign investment venture capital or equity investment enterprises; cement, steel, electrolytic aluminum, shipbuilding and other national macro-control industries.

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Feedback from the draft manuscript ended in August 31st. In conjunction with what Peng Xingtang, vice president of the Hongkong monetary authority, called "expected RMB FDI within the year", the launch of RMB FDI seems to be at hand.

"This is a concrete step to promote financial liberalization and promote the internationalization of RMB."

Cao Honghui told the daily economic news reporter.

At present, the circulation of RMB in Hongkong can not be freely repatriated to the mainland. Only 3 foreign institutions, including the overseas central bank, Hong Kong and Macao clearing bank, and overseas participants, have launched a pilot project to invest in the inter-bank bond market in the mainland.

Other funds can only be deposited in banks or investment in bonds and other limited renminbi financial products.

Since the beginning of this year, the number of RMB in Hongkong has been increasing. Data from the Hongkong monetary authority show that RMB deposits in Hongkong reached 553 billion 600 million yuan at the end of June.

The total amount of RMB remittance from cross-border trade settlement increased from 153 billion 400 million yuan in May to 205 billion 100 million yuan in June.

Last week, Vice Premier Li Keqiang announced a number of financial and trade measures to help Hongkong develop, including Hong Kong enterprises' FDI, QFII and QFII ETF.

Among them, FDI and QFII will help widen the reflux channel of RMB.

Mei Yuxin, an associate researcher of the Ministry of Commerce and international trade and Economic Cooperation Research Institute, said, "the above measures mark the adjustment of the focus of RMB internationalization.

Allowing foreign investors to use Renminbi to launch direct investment in China, in particular, helps to increase the acceptability of market participants in Europe and the United States and other regions, thereby further promoting the internationalization of RMB and achieving our original intention to reduce the growth of foreign exchange reserves.

RMB settlement in cross-border trade extends to the whole country.

Yesterday, the central bank also announced that since the June 2010 cross-border trade RMB settlement pilot expanded to 20 provinces, municipalities and autonomous regions such as Beijing, it will further expand to the whole country.

The six ministries and commissions such as the Central Bank jointly issued the notice on expanding the RMB settlement area for cross-border trade. Hebei, Shanxi, Anhui, Jiangxi, Henan, Hunan, Guizhou, Shaanxi, Gansu, Qinghai and Qinghai, which failed to participate in the settlement of 11 provinces (municipalities and autonomous regions), were able to carry out cross-border trade RMB settlement.

At the same time, enterprises in Jilin, Heilongjiang, Tibet autonomous region and the Xinjiang Uygur Autonomous Region carry out RMB settlement of export goods trade overseas, extending from neighboring countries to all countries and regions outside the country.

The central bank said that the expansion of the cross-border trade RMB settlement area to the whole country is an important measure to implement the deployment of "expanding the cross border use of RMB" in the national "12th Five-Year plan" plan, which can better meet the needs of enterprises and further facilitate trade and investment facilitation.

Cao Honghui believes that there are still many aspects to be studied next. It is suggested that the RMB cross-border payment and settlement system be established through the inter central bank cooperation mechanism, and the ASEAN countries should be encouraged to issue the sovereign bonds of the RMB plan.

As for the current foreign exchange reserves caused by the asymmetry of RMB and US dollar settlement in import and export, a sharp increase should not be made in order to choke off the food. Instead, we should focus on the long term, perfect policies and measures in time, and implement reverse regulation.