2.3 The current situation of direct investment and securities investment

2.3.1 RMB overseas direct investment

In line with the experimentation of RMB settlement,for the convenience of banks and domestic institutions carrying out RMB settlement business in overseas direct investment,the PBOC promulgated the Regulations on the Administration of Experimentation of RMB Settlement in Overseas Direct Investment,which states that since August 23,2011,banks and enterprises could carry out RMB overseas direct investment (i.e.RMB ODI) within the approved amount.

According to the statistics of the Ministry of Commerce,in 2011,Chinese domestic investors made non—financial overseas direct investment in 3 391 foreign firms in 132 countries and regions,which mounted up to 60.07 billion USD,up 1.8% over the last year.The amount of RMB ODI was 20.15 billion RMB,accounting for 5% of total ODI at the exchange rate at the year end(Figure 2—13).

Figure 2—13 Growth of RMB ODI

Source:PBOC,the Ministry of Commerce.

RMB overseas investments are relatively concentrated in some regions,mainly in those with a large amount of Chinese,like Hong Kong and Singapore.Since the experimentation was launched,after just half a year,the proportion of RMB overseas investment had increased from 5.4% to 17.59%.It demonstrated a good momentum of development.

2.3.2 RMB foreign direct investment

Foreign direct investment actual foreign investing amount was 116.011 billion USD by the end of 2011, increased 9.72% year—to—year. Among them, Foreign direct investment RMB settlement was 90.72 billion RMB. RMB FDI held 12% according to the exchange rate at the end of 2011 (Figure 2—14).

Figure 2—14 FDI RMB settlement business in 2011

Source:The Ministry of Commerce.

2.3.3 Foreign—invested RMB financial assets

At present,RMB is not fully convertible and capital account is not completely opened yet,so QFII (Qualified Foreign Institutional Investors) scheme comes up as a provisional arrangement.It requires that before entering Chinese capital market,a foreign investor should meet some demands,remit a required amount of foreign exchange after the approval of authority and convert it into RMB,then invest into Chinese financial market through a strictly monitored account.Holding of Chinese financial assets by foreign investors is an important index reflecting the degree of RMB's internationalization.

By the end of 2011, 96 QDII institutions had been approved by the State Administration of Foreign Exchange. The number of the domestic securities investment was 21.6 billion dollars. The inflow of foreign exchange run by QFII was 20.5 billion dollars in total, and the export foreign exchange was 4.4 billion dollars, the net inflow of foreign exchange was 16.1 billion dollars. From 2010 to 2011,the inflow of foreign exchange decreased from 3.2 billion dollars to 2.2 billion dollars, that is, the inflow was down 32% in this year; the export foreign exchange was 1.4 billion dollars, increasing 142% of the amount in 2010;The net inflow of foreign exchange was 0.8 billion dollars, decreased 70% of the amount in 2010. In terms of the structure of asset allocation, the main asset is stock, accounting for as high as 70%.

In 2011, the investment net inflow of China was 13.4 billion dollars, down by 58% year on year. Because of the sovereign debt crisis of the United States and Europe, the scale of the foreign stock investment was 5.3 billion dollars in 2011 under the continuous pressure of overseas shorting forces, fell by 83% comparing with 2010. However, in terms of bond investment, the situation was different. Under the influence of the policy that China has allowed the offshore RMB clearing banks to use RMB to invest in interbank bond market and the influence of the larger scale of the RMB bond issued by domestic financial institutions to Hong Kong, the foreign investment on Chinese Trea—sury bond had a massive growth to 8.1 billion dollars, rose 24 times comparing with 2010.

The system of QDII is relative to QFII. The scale of QDII reflects the situation of Chinese residents' investment in foreign financial asset. In the context of the slowdown in the world's major economies, the remittance of capital in QDII was down. In 2011,the export capital is 11.5 billion dollars and the inflow of the capital is 10.8 billion dollars, decreased by 9% and 23% comparing with that in 2010.By the end of 2011, 96 QDII institutions had approved by the State Administration of Foreign Exchange,the amount of the investment reached 74.9 billion dollars, and the export capital accumulated to 91.5 billion dollars. In the structure of asset, the stock accounted for 64%, still in the main position. The next is fund, accounting for 20% of the asset.