HK's Monetary Authority keen on renminbi settlement scheme

The authority believes China would benefit as 63% of Mainland’s outward direct investments are in Hong Kong or through Hong Kong.

The Monetary Authority has welcomed the People's Bank of China's announcement on Thursday of a pilot scheme for the settlement of overseas direct investments in renminbi.

Mainland enterprises will be able to conduct direct investment overseas using renminbi. Hong Kong branches and correspondent banks of Mainland banks can also obtain renminbi funds from the Mainland and extend renminbi lending to the enterprises conducting the investments, according to a government report.

Monetary Authority Chief Executive Norman Chan said the scheme will further enhance the circulation of renminbi funds for trade and investment activities.

Hong Kong has long been the prominent platform for the Mainland's outward direct investments. In 2008 and 2009, the Mainland's outward direct investments amounted to US$55.9 billion and US$56.5 billion, of which 69% and 63% was invested in Hong Kong or through Hong Kong to other parts of the world.

Upon implementation of the pilot scheme, Mainland enterprises can conduct such investments through Hong Kong's offshore renminbi centre, and at the same time make use of the multi-currency and multi-functional financial platform in Hong Kong for related financing and fund management activities.