China’s economy and financial markets: Reforms and risks

Qualified Foreign Institutional Investor (QFII) Program: Started in 2002. Allow eligible foreign authorities to convert foreign currency into Renminbi and invest in Chinese stocks (including A shares and B shares) and other various RMB denominated financial instruments. As of October 2015, 277 foreign organizations have awarded a total of $ 78.9 billion, including 8 central banks and 10 sovereign wealth funds.

Renminbi qualified foreign institutional investor (RQFII) program: Started in 2011. Eligible institutions are permitted to use offshore renminbi funds to invest in Chinese stocks and other RMB denominated financial instruments. As of July 2015, a total of 68.4 billion dollars have been issued to 135 financial institutions.

Qualified Domestic Institutional Investor (QDII) Program: Started in 2006. We will allow domestic financial institutions in China (commercial banks, securities companies, fund management companies, insurance companies) to invest in offshore financial products such as securities and bonds. As of November 2015, a total of $ 90 billion in quota has been awarded to 132 financial institutions.

Qualified Domestic Individual Investor (QDII 2) Program: Proposed in 2013, it is not yet available. Allow private individual investors with assets of at least 1 million yuan ($ 160,000) to invest in certain overseas financial products

Free Trade Zone (FTZ): Shanghai Free Trade Zone was established in September 2013. In April 2015, three new free trade zones of Guangdong province, Tianjin city, Fujian province were established. Free trade zones use the "negative list" approach to regulate foreign investment - rarely in industries where restrictions on foreign investment are not on the list. Regional capital transactions and the establishment of financial institutions in the region are liberalized

Shanghai - Hong Kong Stock Connect: released in 2014. Chinese investors can buy Hong Kong shares and listed companies in Hong Kong, foreigners can buy Shanghai China A shares. Annual quota from Hong Kong to Shanghai: RMB 300 billion (US $ 47 billion), allocated amount per day 13 billion RMB (2 billion USD). Annual quota from Shanghai to Hong Kong: 250 billion yuan (US $ 39 billion), daily quota: 10.5 billion yuan (US $ 1.6 billion)

Connection of investment trusts: started in July 2015. Through a simplified review process, it is permitted to allocate qualified mainland and Hong Kong funds to each other's markets. Total initial investment: RMB 300 billion (US $ 47 billion) for internal and external capital flows

Third, in the early steps of the pilot reform in the FTZ, these reforms seem to have a strong tendency to promote external capital flows rather than opening China to international financial competition. Several free trade zone reforms are trying to create funds in RMB-denominated asset markets. The focus of the reform directive is to ease issuance of RMB denominated bonds in free trade areas. This will create opportunities to raise surplus capital in China and develop it into investment projects around the world.

The first screening in Greater China is one of the most dynamic regions of the world economy. As China joins the World Trade Organization, China 's financial markets are at the forefront of economic reform and openness. Financial services also provide China the most exciting foreign business opportunities. However, the recent Asian financial crisis highlighted the problems of state enterprises in China and the functional deterioration of the banking system. This article is looking for business opportunities in China's financial services industry. It will start with a review of emerging economies and explain why specific areas will be selected. The research of this paper also includes business analysis in China, review of profitable industry, business entry strategy and operation of its functional areas in China. Finally, I will explain the future strategy and recommendations of this investment.

China's financial markets have grown from the initial low level in the past 25 years. In many respects, financial markets are still underdeveloped, but market reforms and open markets have steadily grown over the years. China's accession to the World Trade Organization in December 2001 was seen as an important milestone, and since that time many financial market reforms have increased. Below is a brief explanation on the role of financial markets and capital markets in China. The unified domestic interbank market in China was founded in 1996. Commercial banks and other financial institutions participate in interbank money markets. Money market originally was a short-term liquidity transaction between financial institutions, but PBC became an important platform for doing business in open market (Chen et al. 2013).