China Watch Blog has learnt that Financial Secretary John Tsang has said that China can leverage Hong Kong’s effective financial resource allocation platform to facilitate the renminbi’s internationalisation as the territory is an important constituent of China’s financial market.
This was the key message in Tsang’s opening address at a seminar on implementation of the Central Government’s measures to support Hong Kong’s financial development.
“Funds may ‘come in’ and ‘go out’ in an orderly manner through the onshore and offshore fund circulation mechanism. An active renminbi liquidity is conducive to the introduction of more renminbi products in Hong Kong and would help to build a multi-layer financial market in China during the 12th five-year period. This would achieve the goal of promoting cross-border use of renminbi while safeguarding financial security of the nation,” Tsang said.
Renminbi direct investment and renminbi trade settlement measures had been implemented successfully, he added.
On October 14, the Ministry of Commerce and People’s Bank of China promulgated a notice on cross-border renminbi foreign direct investment and related renminbi foreign direct investment settlement rules, Mr Tsang said, adding wider use of renminbi for direct investment would lower the risk of currency exchange for Hong Kong enterprises.
He said the notice clearly set out the vetting criteria. This enables enterprises to gain greater confidence in issuing bonds in Hong Kong, enhances international investors’ interest in buying renminbi bonds in Hong Kong, and attracts more enterprises to make use of the renminbi fund-raising platform here for financing direct investment on the Mainland.
Hong Kong’s offshore renminbi business will be expanded, he added.
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