Under the yuan-denominated investment program, the new quota for USA investors is the largest given out by the central bank after the 270 billion yuan given to Hong Kong, a Chinese city that operates under its own laws.
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A central bank vice governor, Yi Gang, announced the quota at the bilateral Strategic and Economic Dialogue talks in Beijing, without providing further details such as a timeframe.
Chinese officials, after two days of high-level talks with their US counterparts, announced Tuesday that USA investors are being offered a quota of 250 billion yuan ($38.1 billion) to buy Chinese stocks and bonds. USA firms approved by Chinese regulators would now be able to invest yuan funds raised overseas up to that amount to buy Chinese securities.
The moves will allow Beijing to pursue its ambition of making the yuan a more widely used global currency, while giving US investors greater access to China’s domestic markets. Hong Kong has the largest RQFII quota at 270 billion yuan. As reserves fall, China’s soaring debt and flagging growth. Heavy capital outflows seen last year seem to have subsided after the PBOC’s heavy intervention to support the yuan in January and February, though the more recent weakening of the yuan to its lowest levels this year has put outflows back on the radar.
The optimal window to make progress on a U.S.
Yi said China was considering appointing qualified foreign institutions as settlement institutions and bond underwriters, and is simplifying the approval procedures for its RQFII program.
“Depreciation expectations faded and the central bank didn’t burn its reserves to intervene in the foreign exchange market”, said Li Wei, a China and Asia economist at Commonwealth Bank of Australia in Sydney.
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US financial services firms will have increased access to China and legal, corporate and financial regulatory reforms will increase investors’ participation in China’s financial markets, Lew also said.
