As part of China’s commitment to foster the development of the offshore RMB bond market in Hong Kong, the National Development and Reform Commission (“NDRC”) published the “Circular on the Matters relating to the Issuance of RMB Bonds in Hong Kong by Onshore Non-financial institutions” (the “NDRC Circular”) on 2 May 2012. The Circular is a sequel to the “Interim Measures for the Administration of the Issuance of RMB Bonds in Hong Kong by Onshore Financial Institutions” published by the NDRC in June 2007 which regulate the issuance of RMB bonds in Hong Kong by onshore financial institutions (the “2007 Measures”).
Prior to the publication of the NDRC Circular, approvals for onshore PRC non-financial institutions to issue RMB Bonds in Hong Kong have been granted on a discretionary basis. In November last year, Baosteel Group Corporation became the first PRC corporate to issue RMB bonds in Hong Kong. Late last month, one metals and mining company and three state-owned power plant operators, namely China Minmetals, Guangdong Nuclear Power, Huaneng Power and Datang Power , were granted approvals by the NDRC to issue RMB bonds in Hong Kong. The significance of the NDRC Circular is that it formalises the approval process and stipulates the regulatory framework for onshore PRC non-financial institutions to issue RMB bonds in Hong Kong.