China to support HK in building itself into offshore RMB center

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Visiting Chinese Vice Premier Li Keqiang said on Wednesday that the Chinese central government will actively support the growth of the RMB market in Hong Kong and its drive in building itself into an offshore RMB center.

Chinese Vice Premier Li Keqiang addresses an economic forum in Hong Kong, August 17, 2011.

Li made the remarks when he was addressing a forum on the nation's 12th Five-Year Program (2011-2015) and cooperation between the mainland and Hong Kong.

The vice premier said Hong Kong enjoys a natural advantage in developing the offshore RMB business and new supportive measures for Hong Kong by the central government include the expansion of RMB circulation channels among others.

Li said the central government will support the innovation and development of offshore RMB financial products in Hong Kong and cross-border trade settlement in RMB "should be extended to cover the whole country."

In addition, he said that pilot projects for foreign banks to replenish capital with RMB will be launched and support will be given to Hong Kong enterprises in making direct investment on the mainland in RMB.

Li added that the RMB Qualified Foreign Institutional Investors (RQFIIs) will be allowed to invest in mainland securities markets with an initial size of 20 billion RMB yuan.

For RMB-bond market, Li said more mainland-based financial institutions and enterprises will be allowed to issue RMB bonds in Hong Kong, which will result in rising amount of RMB bonds issued by mainland institutions in Hong Kong.

"Issuing RMB treasury bonds in Hong Kong will be a long-term institutional arrangement of the central government. We will gradually increase the size of issuance and work for the development and improvement of the RMB bond market in Hong Kong," Li said.