Zhu Hexin highlights deepening of financial market connectivity between Mainland and HK

Zhu Hexin, Deputy Governor of the People's Bank of China and Director of the State Administration of Foreign Exchange, stated today (Nov. 19) at the Global Financial Leaders' Investment Summit that for many years, the People's Bank of China and the State Administration of Foreign Exchange have continuously deepened financial cooperation between the mainland and Hong Kong, supporting the construction of Hong Kong as an offshore renminbi business hub and firmly maintaining its status as an international financial center.

Regarding specific measures to support the construction of Hong Kong as an international financial center, Zhu pointed out several key initiatives.

First, there will be deepening of financial market connectivity between the two regions. The People's Bank and relevant financial regulatory departments are closely collaborating to continuously optimize mechanisms such as Bond Connect, Cross-Border Wealth Management Connect, and Swap Connect. In January of this year, new measures were introduced to facilitate participation in the markets by domestic and overseas investors, reinforcing Hong Kong's role as a bridge for international capital in and out from the mainland. Currently, overseas investors hold more than RMB 4 trillion in Chinese bonds, and over 120,000 individual investors from the Guangdong-Hong Kong-Macao Greater Bay Area are participating in the pilot of the Cross-Border Wealth Management Connect initiative, with the China Securities Regulatory Commission (CSRC) issuing over RMB 90 billion yuan, reflecting Hong Kong's unique advantages and position in financial center construction and wealth management.

Second, there will be support for the construction of Hong Kong's offshore renminbi market. Hong Kong is China's largest offshore renminbi center, with the People's Bank regularly issuing renminbi central bank bills in Hong Kong, enriching the products and services of the offshore renminbi market, and supporting the Hong Kong Monetary Authority in improving renminbi liquidity arrangements. Through the efforts of various parties, Hong Kong has become the most influential offshore renminbi business hub globally, with deposits nearing RMB 1 trillion, accounting for about 60% of the total offshore renminbi deposit balance.

Third, there will be a deepening of reforms in foreign exchange management for Qualified Foreign Institutional Investors (QFIIs). In July of this year, the People's Bank and State Administration of Foreign Exchange further optimized the management of domestic securities and futures investment funds for foreign institutional investors, which streamlines registration and various procedures, broadens foreign exchange risk management, and promotes the direct market entry of interbank bond markets.

Fourth, there will be a steady issuance of QDII (Qualified Domestic Institutional Investor) quotas. The Hong Kong financial market is an important venue for domestic investors' overseas investment allocation, with domestic investors widely investing in stocks, bonds, funds, and derivatives in the Hong Kong market through established channels. Currently, the State Administration of Foreign Exchange has approved nearly 200 institutions for investment quotas, with the total quota exceeding US$160 billion, strongly supporting domestic investors' allocation of overseas assets.

Fifth, cross-border credit cooperation will be promoted to facilitate corporate cross-border financing. In February of this year, the People's Bank signed a memorandum with the Hong Kong Monetary Authority to promote credit cooperation and product mutual recognition between the mainland and Hong Kong, providing credit services for cross-border corporate loans and supporting companies in Shenzhen and Hong Kong in enhancing the accessibility and convenience of cross-border financing.

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