China plans to allow cross-border direct investment in RMB

%3CP%3E%3CFONT%20face%3DVerdana%3EChina%27s%20Ministry%20of%20Commerce%20has%20said%20it%20intends%20to%20allow%20cross-border%20direct%20investment%20into%20the%20country%20in%20the%20Chinese%20currency%20renminbi%20%28RMB%29%2C%20the%20country%27s%20latest%20effort%20to%20diversify%20investment%20options%20of%20the%20yuan%20and%20facilitate%20its%20internationalization%20process.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EForeign%20investors%20will%20be%20able%20to%20make%20direct%20investments%20in%20China%20with%20RMB%20obtained%20legally%20from%20overseas%2C%20according%20to%20a%20draft%20released%20by%20the%20ministry%2C%20which%20is%20currently%20soliciting%20public%20feedback%20on%20the%20new%20rules.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20ministry%20said%20in%20a%20notice%20on%20its%20website%20the%20move%20was%20aimed%20at%20%22further%20promoting%20cross-border%20trade%20and%20investment%20in%20RMB.%22%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20ministry%20said%20RMB%20funds%20obtained%20through%20cross-border%20trade%20settlement%20and%20overseas%20issuance%20of%20RMB-denominated%20bonds%20or%20stocks%20are%20eligible%20for%20such%20direct%20investments.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ERMB%20profits%20gained%20by%20foreign-invested%20companies%20in%20China%20and%20then%20remitted%20out%20of%20the%20country%20are%20also%20eligible.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EHowever%2C%20those%20overseas%20RMB%20funds%20can%20not%20be%20used%20to%20invest%20in%20negotiable%20securities%20and%20financial%20derivatives%20in%20China%20directly%20or%20indirectly%2C%20nor%20to%20provide%20entrusted%20loans%20in%20the%20country%20or%20repay%20domestic%20or%20overseas%20loans%2C%20said%20the%20ministry.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20move%20follows%20remarks%20by%20Vice%20Premier%20Li%20Keqiang%20last%20week%20that%20support%20will%20be%20given%20to%20Hong%20Kong%20enterprises%20making%20direct%20investment%20on%20the%20mainland%20in%20RMB.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EThe%20RMB%20Qualified%20Foreign%20Institutional%20Investors%20%28RQFIIs%29%20will%20be%20allowed%20to%20invest%20in%20mainland%20securities%20markets%20with%20an%20initial%20size%20of%2020%20billion%20yuan%2C%20Li%20announced%20during%20a%20visit%20to%20Hong%20Kong.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3EAnalysts%20believe%20those%20pledges%20will%20speed%20up%20circulation%20of%20RMB%20funds%20both%20into%20and%20out%20of%20China%20and%20help%20the%20yuan%20become%20a%20more%20international%20currency.%3C/FONT%3E%3C/P%3E%0D%0A%3CP%3E%3CFONT%20face%3DVerdana%3ETo%20encourage%20the%20internationalization%20of%20RMB%2C%20the%20Chinese%20government%20allowed%20trials%20of%20cross-border%20trade%20settlement%20in%20RMB%20in%20July%202009%20and%20expanded%20the%20project%20to%2020%20provinces%2C%20municipalities%20and%20autonomous%20regions%20last%20year.%3C/FONT%3E%3C/P%3E