陆家嘴论坛聚焦人民币国际化与金融开放及货币政策改革

China Financial opening-up further opening-up, and enhancing the monetary toolkit Senior Economist,Greater ChinaThe Hongkong and Shanghai Banking Corporation Limitederin.y.xin@hsbc.com.hk+85229966975TaylorWang + China unveiled an action plan to better utilise foreigninvestment,increase market access,and encourage R&D The Hongkong and Shanghai Banking Corporation Limitedtaylor.t.l.wang@hsbc.com.hk+85222888650Jing Liu +Muted consumption during the Dragon Boatfestival and"6.18",fiscalspendingslowedinMay,andSLGBneedsalift Chief Economist, Greater ChinaThe Hongkong and Shanghai Banking Corporation Limitedjing.econ.liu@hsbc.com.hk+85239410063Heidi Li The2026LujiazuiFinancial Forumwasheldon17-18June,withChina'stopfinancial regulators (including leaders from the PBOC, NFRA, CSRC and SAFE) participating.The commitment to high-level opening-up,capital market reforms, andmonetarypolicy reform was evident in their speeches,while a slew ofmeasures was alsounveiled (see Table 1). AssociateGuangzhou The Forum sent a clear signal of support for high-level financial opening-up.Authorities will pilot offshore financial activities, covering areas such as offshore tradefinance, free trade zone offshore bonds,and offshore reinsurance. Offshore FXtradingintheShanghaiFTZbysixlargedomesticcommercialbanksandanewRMBRepoFacility for central banks were also introduced (Foreign and InternationalMonetary Authorities (FIMA)RMB Repo).Themoves could support liquidity andaligns with the 15th FYP's incentive to promote RMB internationalisation, high-levelopening-up, and support Chinese companies' global strategy. On the monetary policy front, the PBOC announced adjustments and enhanced useofthetemporaryovernightrepoandreverserepooperationtools(whichwereintroduced in July 2024).The rates will be set at 25bp below and above the policycorridor of 50bp versus 70bp previously.This should help control volatility offront-end interbank borrowing costs,which typically shows seasonal spikes towardsquarter-end (Chart 31).This may also pave the way for eventual use of the overnightrate as the key policy rate, as used in many DM central banks including the Fed.While we think the PBOC is likely to keep the policy rate on hold this year (see GlobalEconomicsQuarterly,22June),theadjustmenttomonetarytoolsaddsmoreoptionsto the PBOC's toolkit. FDl:Anew action plan to betterutilise foreign investmentand open-up accessforeign activities.On 22 June, China's Ministry of Commerce, together with othergovernment departments, released an action plan to optimise the utilisation of foreigninvestment.Theplan includes expandingmarketaccess in sectors suchasservices,finance,andpharmaceuticals;streamliningprocessesforcross-bordermergersandacquisitions, data flows, and reinvestment by foreign invested enterprises in China;and strengthening policy support measures forforeign funded R&D centres. Issuer of report: The Hongkong and ShanghaiBanking Corporation Limited Disclosures &Disclaimer This report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it. ViewHSBCGlobal InvestmentResearchat:https://www.research.hsbc.com centres and increase investment in China, and we are seeing a revival in FDI flows (Chart 1)The World Intellectual Property Organization (WiPO)has ranked China among the world'stop-10 most innovative economies. In the first five months of this year, nearly 4,000 foreignenterprises expanded their investments in China. In 2025, R&D spending accountedfor 14.3%of MNCs'global R&D in their greenfield investment in China, with pharmaceuticals attracting thelargest share (70.8% of total R&D investment) (CA/TEC, 16 June).The action plan willencourage FDl inflows and channel capital into high-tech industries and modern services,supporting industrial upgrading and long-term development.Meanwhile,a relatively stable China-US economic and trade relationshipmayalso support strongerUs investmentappetite (Chart2).Chinaand the UShaveagreed tosetupa Board ofInvestment Board to identify and clarify non-strategic sectors where they can strengthenbilateral investment cooperation.From January to May,US FDI in China increased by 17.3%y-o-y. Meanwhile, China's resilience amid the Middle East conflict has further strengthened itsrelative appeal, reflected in a 285.5% increase in Saudi investment.The recent easing of MiddleEast tensions between the US and Iran may also help sentiment to improve trade andinvestment flows (CNBC, 22 June).Consumption:Dragon Boatfestival sees percapita spending down;"6.18"salesmuted China's consumers remain cautious (see China's cautious consumer,22 May).China recentlyheld the annual Dragon Boat festival (19-21 June), which saw the number of domestic trips rise4.4% y-0-y (124m), while total spending increased 4% (RMB44.5bn). While each hit newrecords, the per capita spending remained below pre-pandemic levels (down 14% vs 2019)(Chart 3). Ongoing caution f