OREANDA-NEWS. October 31, 2011. The PBC released the Administrative Rules on Settlement Business of Foreign Direct Investment Denominated in RMB, in order to realize the plan of expanding the RMB’s use abroad as contained in the 12th Five-Year Program, to implement the central government policies designed to support the economic and social developments in Hong Kong, and to regulate banks’ handling of settlement business of foreign direct investment denominated in RMB. Banks can now provide settlement services to overseas investors who have made RMB denominated direct investment, reported the press-centre of PBC.

The Administrative Rules are compatible with the current FDI management practices in China, and released in accordance with the principle of market-based regulation to facilitate investment. The Administrative Rules make it clear that overseas enterprises, economic entities and individuals can apply directly to commercial banks for settlement of their RMB denominated direct investment as long as such investment comply with the relevant laws in China that governs FDI activities, and the commercial banks shall provide RMB fund settlement services to enterprises established with FDI. The procedures have become more convenient.

PBC and the concerned departments will establish an information sharing mechanism, step up ex post supervision, facilitate follow-on check of the use of FDI fund, and enhance bank awareness of risk prevention.

It is expected that the launch of settlement business for RMB-denominated FDI will encourage overseas use of RMB, support the RMB market development in Hong Kong and facilitate trade and investment.