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China Briefings

Reports on China issued by Samsung Economic Research Institute

China Business Intelligence No. 206

China Business Intelligence No. 206

Samsung Economic Research Institute Beijing Office

Oct. 11, 2011

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China would allow Hong Kong companies directly invest in the mainland. The government expects that the introduction of the policy will lower investment costs and plans to guide investment through management and monitoring of yuan FDI. The new system will accelerate globalization of the yuan, ease increase of foreign exchange reserve and raise the global status of the Hong Kong 's financial market on the global stage. However, it will also bring in more hot money, raise yuan liquidity and put negative impacts on industrial restructuring. To achieve positive results, the Chinese government should make continued efforts to complement the system, improving institutions and developing know-how for monitoring and management.

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