Renminbi-Denominated Inward Direct Investment Gets Underway in China

Abstract:     
At one time, inward direct investment in China was only possible using foreign exchange. Since the ban on using the renminbi to settle trade transactions was lifted in July 2009, however, restrictions on the use of the renminbi for inward direct investment have also been lifted on a trial basis and were officially lifted altogether in October 2011. As the issuance of dim sum bonds in Hong Kong, a major source of renminbi funds for inward direct investment, has increased, Japanese companies and Japanese financial institutions have featured as issuers and underwriters. As the proceeds of some of these issues are remitted to the mainland, Hong Kong's offshore renminbi market and the use of the renminbi to fund inward direct investment in the mainland are likely to grow in tandem.

Number of Pages in PDF File: 12

Keywords: China, renminbi, offshore renminbi market, dim sum bonds, MOFCOM

JEL Classification: F34, F42, G15, G24, G32, G38

Accepted Paper Series