MNI BRIEF: China Prepares To Launch Swap Connect In 2023

Chinese regulators are preparing to launch the Swap Connect next year, which will provide global investors with access to China's derivatives market, said Huo Yingli, party secretary of the China Foreign Exchange Trade System, at a forum on Friday.

The scheme, which was signed with Hong Kong Stock Exchange in July, will further open up China’s onshore financial market by allowing access to interbank interest rate swaps.

The selling of yuan bond by foreign investors has slowed, with most months in the second half of the year seeing net purchases, said Huo, speaking at the Bund Summit in Shanghai sponsored by the China Finance 40 Forum. This shows that the China-U.S. interest spread is not a major factor in driving flows, but foreign investment behaviors are more susceptible to global financial risks and investors also pay attention to whether rules and regulations are open and transparent.

This makes its necessary to accelerate the institutional opening up of China's markets, strengthen alignment with international rules, and create a predictable policy framework for market opening. China should also strengthen the linkage between domestic financial infrastructure and financial markets, and let markets play a decisive role, Huo added.