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English>>China Business

A More Global Yuan

By Lan Xinzhen (Beijing Review)

10:55, November 21, 2012

USING THE YUAN: China is accelerating the process of internationalizing its currency (ZHANG CHUNLEI)

Sales of RQFII products prove international demand for the renminbi is growing

Demand for the renminbi in Hong Kong has led several senior officials, including Financial Secretary John Tsang Chun-wah, Secretary for Financial Services and the Treasury K.C. Chan and Hong Kong Monetary Authority (HKMA) Chief Executive Norman T.L. Chan, to pay a visit to Beijing on October 29, asking the China Securities Regulatory Commission (CSRC) for support and exchanging views with CSRC Chairman Guo Shuqing.

A senior CSRC official disclosed on November 2 that upon request of the government of the Hong Kong Special Administrative Region, the CSRC is planning to further enlarge the investment quota for renminbi qualified foreign institutional investors (RQFII) by coordinating with the People's Bank of China (PBC) and the State Administration of Foreign Exchange (SAFE).

Hong Kong appealed for another RQFII investment quota of 100 billion-200 billion yuan ($15.9 billion-31.8 billion), which has been supported by the CSRC. On November 13 the CSRC, PBC and SAFE agreed to increase the RQFII quota by 200 billion yuan ($32.12 billion).

Besides raising the investment quota, the commission will also consider further improving the RQFII system by expanding its investment scope and relaxing investment restrictions so as to allow more Hong Kong financial institutions to apply for the RQFII.

Industrial insiders think expanding the RQFII investment quota and relaxing application qualifications will undoubtedly accelerate the capital account convertibility of the renminbi and promote the process of its internationalization.

Hong Kong is the world's largest renminbi offshore center, and the source of most of the present RQFII capital. According to figures from HKMA, renminbi deposits in Hong Kong had reached 550 billion yuan ($87.44 billion) by the end of September. It is expected that as the renminbi is more internationalized, the amount of RQFII capital will increase steadily.

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