China issues regulations on FDI with RMB settlement

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Pedestrians walk past the headquater of the People's Bank of China.

The People's Bank of China (PBOC), the central bank, announced Friday it has just issued regulations about foreign direct investment (FDI) settled in the Chinese currency Renminbi (RMB).

Foreign institutional and individual investors will be able to apply for permits to make direct investments in China with the settlement of RMB, on the condition that their investments are in line with China's current laws and regulations, according to a statement posted on the PBOC's website.

The move will further promote cross-border trade and investment settled in RMB and support the development of the RMB market in Hong Kong, the statement said.

The PBOC will work with other authorities to develop a management system for sharing information and closely monitoring investments to help banks ward off risks, the statement said.

The move follows Vice Premier Li Keqiang's remarks in August pledging support for Hong Kong enterprises making direct investments in the mainland with the means of settlement in RMB.

To encourage the internationalization of the RMB, the Chinese government allowed trials of cross-border trade settlement in RMB in July 2009 and expanded the project to include 20 provinces, municipalities and autonomous regions last year.