RMB internationalisation and capital account liberalisation

The next five years is crucial for China in terms of progress towards achieving 'managed' capital account convertibility and RMB internationalisation. 

The 13FYP is expected to promote a further opening up of the capital account to increase two-way capital flows, such as the Qualified Domestic Individual Investor (QDII2) scheme, and allowing more institutional investors to enter the domestic financial market. 

For instance, the PBoC has already opened up the interbank market to foreign public institutions. Meanwhile, China will continue to relax FX regulations to complement the opening of its capital account. 

"FX deregulation will likely be focused on a few aspects, including the streamlining of FX administration, granting greater convenience and flexibility in the handling of crossborder FX flows, and enhancing the supporting transaction infrastructure to promote the wider use of the RMB in trade settling, financing and investment globally", says Barclays.