Trade Settlement, Hedging, Investment and Trading

Hai Xin

5.1 INTRODUCTION

This chapter summarises the practical information on several main activities relating to renminbi foreign exchange: trade settlement, hedging, investing and trading. Much of the information contained in this chapter has been discussed earlier in the book but in many different places, but here we will try to categorise them. We had to scale back our original plan of mapping out a detailed flowchart on every such activity carried out by different types of institution based either onshore or offshore. It turned out to be a massive task – we have already mentioned that just the titles alone of the existing foreign-exchange regulations in mainland China ran up to 44 pages (as of June 2011). And, more importantly, the onshore regulations are simply too vague and ephemeral for such flowcharts to be of practical use. Here we stick to broad outlines and the main regulations while omitting most of the exceptions to the general rules. Readers interested in a specific topic should explore it further with service providers or relevant regulators given in this book.

Much of this chapter deals with additional choices and possibilities following the creation of the