China Regulatory Brief: RQFII Expansion & Bilateral Currency Swap Agreement

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Shanghai FTZ Loosens Requirements for Foreign-Invested Certification Authorities

On July 24, the Shanghai Entry-Exit Inspection and Quarantine Bureau announced the approval of the Certification and Accreditation Administration of China’s (CNCA) implementation of further reforms for the approval and supervision of foreign-invested certification authorities (CA) in the Shanghai Free Trade Zone (FTZ). To encourage the establishment of foreign-invested CAs within the Shanghai FTZ, the CNCA has implemented the following policies:

  • Cancellation of the filing procedure for the representative offices of offshore CAs located within the Shanghai FTZ;
  • Removal of the approval process for foreign-invested CAs to set up unincorporated branches within the Shanghai FTZ;
  • Simplification of approval documents and materials for foreign-invested CAs within the Shanghai FTZ; and
  • Acceleration of the approval process.

Previously, a foreign-invested CA wishing to establish a branch in the Shanghai FTZ would be subject to various restrictions such as company scale and personnel requirements.

China Expands RQFII Scheme to South Korea and Germany

Chinese President Xi Jinping recently announced that China would issue RMB Qualified Foreign Institutional Investor (RQFII) quotas of RMB80 billion to South Korea and Germany. Echoing President Xi’s announcement, the China Securities Regulatory Commission (CSRC) clarified that financial institutions from South Korea and Germany may participate in the RQFII program in accordance with relevant laws and regulations starting July 18, 2014.

Launched in 2011, the RQFII program allows qualified investors to invest in RMB-denominated funds in the mainland securities market and aims at widening investment channels for overseas funds on the Chinese mainland. To date, the RQFII program has been expanded to six jurisdictions, including Hong Kong, London, Singapore, France, South Korea and Germany, with total investment hitting RMB640 billion. By the end of June, 2014, 84 foreign institutions had been approved for the program.

China, Switzerland Agree to Bilateral Currency Swap

On July 21, the People’s Bank of China (PBOC) and Swiss National Bank (SNB) signed a currency swap agreement that will allow RMB150 billion (CHF21 billion) worth of local currencies to be exchanged between the two countries over three years. The agreement is expected to help strengthen financial cooperation, boost bilateral trade and promote RMB internationalization.

Since 2008, China has signed currency swap agreements with 15 countries including Hong Kong, Iceland, Australia, New Zealand and Singapore.

China Clarifies High Temperature Allowance

To date, 27 provinces in China have released standards for high temperature allowances. Among these, the allowances of Shanxi and Jiangxi are the highest at RMB240 per month. Hainan Province offers the longest period for the allowance, lasting seven months (from April to October). Four provincial-level jurisdictions, including Beijing, Tianjin, Zhejiang and Ningxia adjusted their allowances in 2014: Beijing increased its minimum high temperature allowance (outdoor) from RMB120 per month to RMB180 per month.

According to the “Administrative Measures on Heat Stroke Prevention” released in 2012, employers are required to provide high temperature allowances to employees working outdoors in temperatures above 35℃ and indoors above 33℃.

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