On September 18, the Central Bank released the 2021 RMB Internationalization Report (hereinafter referred to as the "report").
Among them, a number of heavy data show that as of the end of June, the amount of financial assets such as domestic RMB stocks held by foreign entities increased by 42.8% year-on-year; in 2020, the amount of RMB cross-border receipts and payments reached a record high.
Looking at the overall situation of the cross-border use of RMB, the report pointed out that in 2020, the amount of RMB cross-border receipts and payments will increase rapidly. The total amount of RMB cross-border receipts and payments of RMB on behalf of banks is 28.39 trillion yuan, a year-on-year increase of 44.3%. A record high; in the first six months of 2021, cross-border renminbi receipts and payments amounted to 17.57 trillion yuan, accounting for 48.2% of the total cross-border receipts and payments in domestic and foreign currencies during the same period, an increase of 2.4 percentage points over the same period last year.
Stocks and bonds have become the main types of RMB financial assets allocated by overseas entities
It is worth mentioning that the current overseas entities actively allocate RMB financial assets.
The report pointed out that foreign investors actively allocate RMB assets, and the use of RMB under capital items such as securities investment has become the main driving force for the growth of RMB cross-border revenue and expenditure.
The fundamentals of my country's economy are sound, the monetary policy remains within the normal range, the renminbi has a relatively high spread relative to major convertible currencies, and renminbi assets are highly attractive to global investors.
The report shows that as of the end of June 2021, the total amount of financial assets such as domestic RMB stocks, bonds, loans and deposits held by foreign entities totaled 10.26 trillion yuan, a year-on-year increase of 42.8%.
As of the end of 2020, the total amount of financial assets such as domestic RMB stocks, bonds, loans and deposits held by foreign entities totaled 8.98 trillion yuan, a year-on-year increase of 40.1%.
Among them, the stock market value is 3.41 trillion yuan, the bond custody balance is 3.33 trillion yuan, the deposit balance is 1.28 trillion yuan, and the loan balance is 0.96 trillion yuan.
Among them, domestic financial market stocks and bonds have become the main products for overseas entities to allocate RMB financial assets.
As of the end of 2020, the scale of domestic RMB stocks and bonds held by foreign entities increased by 54.5% year-on-year, of which the amount of bonds held in custody increased by 47.4% year-on-year, accounting for 2.8% of the total bond custody in the inter-bank bond market; the market value of holdings increased by 62.1 year-on-year %, accounting for 4.3% of the total market capitalization of A shares.
In 2020, stocks accounted for 54.9% of the new domestic RMB assets held by overseas entities.
In terms of stock investment, the report shows that the total amount of cross-border receipts and payments of RMB for the “Shanghai-Shenzhen-Hong Kong Stock Connect” business in 2020 will be 1.70 trillion yuan, a year-on-year increase of 65.3%, and a net outflow of 413.287 billion yuan (a net inflow of 122.174 billion yuan in 2019) .
Among them, the total net inflow of "Shanghai Stock Connect" and "Shenzhen Stock Connect" was 178.052 billion yuan, and the net outflow of "Southbound Stock Connect" was 591.339 billion yuan.
The function of RMB denominated currency has been brought into play
Another highlight of the report is that the renminbi-denominated currency has been initially used.
The report disclosed the 2020 market survey on the international use of RMB.
According to the survey results, about 78.8% of domestic and foreign industrial and commercial enterprises surveyed consider using RMB in cross-border transactions or increasing the proportion of RMB use, which has increased compared with previous years.
The survey results also show that 20.5% of domestic industrial and commercial enterprises surveyed stated that they use RMB quotations in cross-border transactions, a slight increase from 2019.
Compared with 2015, the proportion of industrial and commercial enterprises that insist on using renminbi quotations has increased by 4%, while the proportion of industrial and commercial enterprises that use compromise pricing to share exchange rate risks has fallen by 4%.
The report pointed out that in the next stage, the People's Bank of China will steadily promote the internationalization of the RMB, coordinate development and safety, adhere to the principles of responsiveness and “flow as it happens”, adhere to the market-driven and independent choice of enterprises, and further improve the policy support for the cross-border use of RMB. System and infrastructure arrangements, promote the two-way opening of the financial market, develop the offshore renminbi market, create a more convenient environment for market players to use the renminbi, and at the same time further improve the prudential management framework for cross-border capital flows, and strengthen the monitoring and analysis of cross-border capital flows And early warning, keep the bottom line of no systemic risks, and better serve the new development pattern of “dual cycle”.
The report emphasizes that the People’s Bank of China will continue to promote high-level two-way opening of the financial market, enrich risk hedging tools, improve the facilitation of the allocation of renminbi financial assets by foreign entities, and support foreign central banks, monetary authorities and reserve management departments to allocate renminbi reserve assets and expand the renminbi’s assets. Reserve and investment currency functions.
Promote the innovation of RMB cross-border investment and financing business around the construction of the free trade pilot zone (free trade port), the Guangdong-Hong Kong-Macao Greater Bay Area and the Shanghai International Financial Center.
Author: Du Chuan