In addition, as of earlier this year foreign investors are permitted to participate in the domestic foreign exchange derivative market to hedge the currency risk they take on as part of their bond investments. Foreign investors also have access to China’s equity markets through programs such as the Shanghai and Shenzhen Stock Connect schemes with Hong Kong.
The stock connect schemes have facilitated capital outflows from China, alongside other schemes allowing institutional investors to invest offshore. Reflecting the progress that has been made, last year the RMB entered the basket of currencies that determine the value of the IMF’s Special Drawing Right. This followed the IMF’s decision in late 2015 to designate the RMB as ‘freely usable’.