Inconsistencies hamper Chinese RMB deregulation

Author: Brian Yap | Published: 11 Nov 2015

With China’s Xi administration pushing capital account reform to boost renminbi internationalisation, counsel in China and Hong Kong have revealed a tightening of cross-border cash flows.

The People’s Bank of China (PBOC) announced on October 30 that it was considering allowing individuals to purchase overseas assets, as well as foreign companies to trade RMB-denominated bonds in the Shanghai free-trade zone (FTZ).

But legal ambiguities and compliance confusion surrounds the National Development and Reform Commission’s (NDRC) recent circular on offshore RMB bond issuance.      

"The revised regime under the circular is a little bit more restrictive than the previous one because previously offshore PRC subsidiaries could access the offshore market, with no problem, for funds for offshore use," said  Andrew Malcom, partner at Linklaters in Hong Kong.

The move to allow individuals to invest directly in overseas assets was announced under the Qualified...