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Regulators:
The Chinese central bank said at the conclusion of its work conference on February 6 that it will standardise regulations and rules for market access in the corporate bond market, improve the mechanism for dealing with bond defaults, increase the extent to which markets determine the RMB exchange rate, and continue to promote RMB internationalisation.
The PBoC will also continue its neutral monetary policy and ensure a steady level of liquidity in the banking system in 2018.
China will continue to open up its bond and equity markets in 2018, Pan Gongsheng, head of the State Administration of Foreign Exchange (Safe), wrote in a February 8 article published by Financial News, the PBoC’s newspaper. The country will improve Bond Connect and continue its study of launching a London-Shanghai Connect link the UK and China's equity markets.
China will also reform its foreign exchange management for investors using the qualified foreign institutional investor (QFII), RMQ QFII, qualified domestic institutional investor (QDII) and RMB QDII access programmes, Pan added. It will also build a healthy, open and competitive FX market, by expanding the base of market participants and enriching the variety of financial instruments.
FX:
The size of China’s FX reserves stood at $3.16tr at the end of January, up $21.5bn or 0.68% month-on-month, a spokesperson at Safe said on February 7.
Shanghai Pudong Development Bank’s Singapore branch has been approved by China Foreign Exchange Trade System as a foreign currency lending member in the onshore FX market effective February 9.
Trade:
Cambodia may use the renminbi or the Cambodian riel instead of the dollar to settle trades with China, officials at the country’s Commerce Ministry were reported as saying by a February 6 media report.
During his visit to Guangdong province last week, Pan Sorasak, the Cambodian minister of commerce, said there is a need to replace the dollar for bilateral trades with China. The idea was first raised by Ouyang Weimin, vice governor of Guangdong, on the Cambodian official’s visit to the province, according to the media report.
“The Chinese side raised that, from their experiences, when they did trade with other countries using the dollar, exchanging back and forth, they lost a lot of money,” said Seang Thay, a spokesman at the Commerce Ministry. “So now, they want to use the RMB directly.”
The Cambodian central bank urged local businesses to use the renminbi to settle trades with China last October. The country won direct access to China’s onshore FX market in January.
Investment:
China has re-opened the qualified domestic limited partnership (QDLP) programme, a February 8 media report claimed. Each newly-qualified asset manager can invest up to $50m under QDLP, said the report. The outbound investment scheme was put on hold when China tightened capital controls in 2016.