China opens onshore market to foreign lenders

The first group of banks in Hong Kong has received the green light to issue renminbi loans to onshore mainland companies in a scheme hailed as a significant step forward for renminbi globalisation and China’s interest-rate liberalisation.

Fifteen Hong Kong-based banks signed an agreement yesterday to issue loans of up to Rmb2 billion $321 million to enterprises in the Qianhai district of Shenzhen for 26 projects. Tenors and interest rates of the loans can be set independently rather than following the benchmark rates set by the People’s Bank of China PBoC.

This is the first time China has opened its domestic lending market to offshore competition...