China will give the US a 250 billion yuan ($38 billion) investment quota for the first time ever. Beijing wants encourage US investors to buy Chinese stocks, bonds, and other assets. The decision of the People’s Bank of China was announced by Vice Governor Yi Gang on June 7.
Previously, China’s financial authorities restricted purchases of local assets by foreign investors. The decision on quotas aims to make the yuan a widely used global currency and lure capital back to China’s domestic markets.
“China appreciates partnership with the US. Both sides will make joint efforts to broaden use of the yuan in North America”, Yi Gang said at the bilateral Strategic and Economic Dialogue talks in Beijing on June 6-7. US Secretary of State John Kerry and US Treasury Secretary Jacob Lew are involved in the high-level talks.
Now foreign companies are allowed to buy assets in the mainland capital markets under the Renminbi Qualified Foreign Institutional Investor Program launched in 2011.
According to the Program, in 2012 China’s Securities Regulatory Commission raised quotas for foreign investors to $80 billion from $30 billion.