The central government's relaxation of foreign direct investment (FDI) rules in October has led more companies to seek to borrow in yuan, Standard Chartered Bank Hong Kong chief executive Benjamin Hung Pi-cheng says.
The People's Bank of China announced on October 13 a rule change allowing foreign investors to use offshore yuan funds to make direct investments into China.
Since then an increasing number of companies have asked banks to arrange yuan loans or underwrite yuan bond issues to raise funds to finance their mainland projects, said Hung.
The new FDI rule also speeded up the approval time to repatriate yuan raised in Hong Kong to the mainland.
'If all documents are ready, it may now take only five days to get regional governments to approve funds transfers,' Hung said. 'Before the rule changes, this could take months as the approval of many mainland departments was needed.'
Since the rule change, a total of 16.53 billion yuan (HK$20.1 billion) has flowed into 74 projects, Commerce Vice-Minister Wang Chao told a Hong Kong business forum last week. Seventy per cent of that total had come from Hong Kong.
The new FDI rule allows companies to issue yuan shares offshore to raise funds to finance domestic projects, but stockbrokers said so far few firms had shown an inclination to do so, since sentiment on stock markets was depressed.