Channels for Overseas Renminbi Investment in China Analysed by China's Economy & Policy-Gateway

13 Feb 2012 • by Natalie Aster

The use of the Renminbi for cross-border settlement has greatly accelerated its internationalization process and resulted in a rapid increase in the amount of the currency circulating outside China. As a result of cross-border business activities such as trade settlements, etc., overseas enterprises and institutions are holding increasing amounts of Renminbi, bringing about the increased demand for utilization and investment of this offshore supply of currency in order to maintain or even increase its value. Fulfilling this demand involves the design of a cross-border bidirectional circulation mechanism.

According to the report “Analyzing the Channels for Overseas Renminbi Investment ” by China's Economy & Policy-Gateway International Group, despite the fact that the current circulation mechanism is far from perfect, with the ongoing development of various overseas RMB businesses, the domestic financial markets will continue to improve and become more open to the outside world, and the channels for overseas Renminbi investment will become more diversified. This text intends to examine the existing channels and future prospects for overseas Renminbi investment, as well as its impact on capital controls.

Report Details:

Analyzing the Channels for Overseas Renminbi Investment
Published: January, 2012
Pages: 8
Price: US$ 200,00

Since the launch of the pilot program for Renminbi (RMB) settlement of cross-border trade transactions in July 2009, the amount of RMB settlements has continuously expanded, increasing from 3.58 billion RMB at the end of 2009 to 70.6 billion at the end of June 2010; in June 2010, six major Chinese ministries and commissions, including the central bank, jointly issued the Notice on Expansion of the Pilot Renminbi Settlement of Cross-border Trade Program, expanding the coverage of the pilot program for RMB settlement in cross-border trade to 20 provinces, municipalities and autonomous regions in total, as well as all foreign countries and regions. Since then, the total amount of RMB settlements has been increasing, with the cumulative amount of cross-border trade conducted by banks in 2010 reaching 506.34 billion RMB.

More information can be found in the report “Analyzing the Channels for Overseas Renminbi Investment” by China's Economy & Policy-Gateway International Group.

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