Chinese authorities ease rules on Yuan denominated foreign investment

Holders of funds in Hong Kong gain easier access to mainland China investments

According to a Reuters report on Monday, The Chinese Ministry of Commerce has announced a simplification of rules for foreign firms willing to park their Chinese Yuan holdings in the mainland. That just looks like another part of efforts to incentivize a more liberal Yuan trading by scrapping previous bureaucratic investment procedures set in 2010 and 2011.

Until January 1st 2014 all dealings that involve foreign direct investment flows (FDI) will still have to seek the ministry’s approval on a case-by-case basis. After that, requirements will be scrapped and foreign firms will have the ability to move money to mainland China. A previous requirement to file a record with the ministry on sums above 300 million is gone too.

Foreign entities will remain barred from using their CNY funds to trade securities and financial derivatives for now. It is worth noting that the ongoing efforts of Chinese authorities to create new ways of Renminbi holders to invest in mainland’s businesses and industries will create a big flow of funds especially from Hong Kong.

The structural transformation of Chinese economy is going on, and the Chinese currency is getting more usable day by day. Stay tuned to LeapRate for the latest developments on Chinese Yuan liberalization.

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