Beijing unveiled plans on Tuesday that will allow U.S. investors to directly access China’s financial markets, a move that could encourage U.S. investment in Chinese stocks and bonds by making it cheaper and easier to buy and sell these securities.
Chinese officials, after two days of high-level talks with their U.S. counterparts, said U.S. investors are being offered a quota of 250 billion yuan ($38 billion) to buy Chinese stocks and bonds. That quota is second only to the 270 billion yuan for Hong Kong, a Chinese city that operates under its own laws. U.S. firms are expected to receive licenses before the end of the year, according to the U.S. Treasury.
That new access to Chinese markets could help establish the U.S. as a major trading hub for the yuan. Individual U.S. investors could get exposure through funds but wouldn’t be able to participate directly.
Chinese officials also said that Beijing and Washington will designate one Chinese and one U.S. bank as clearing banks in the U.S. for settling yuan transactions.