The econometric analysis in Section III suggests that capital account liberalization measures have played a decisive role in advancing offshore use of the renminbi. However, the Chinese authorities' willingness to implement such measures depends on the effect on mainland capital flow and whether it is consistent with their broader objectives. To assess this, we look at the pattern of capital flows associated with liberalization. How this has affected bilateral evolve relative to those in Table 2 to sustain the process? saly, how measures may need to Table 2. Key Mainland China Capital Account Liberalization Measures Date Measures liberalizing flows in general and renminbi-denominated flows 1980 Special Economic Zones to promote trade and attract FDi 1984 Some coastal cities opened to FI 1993 Mainland firms listed in Hong Kong SAR (in Hong Kong dollars) 1999 FDI liberalization extended to all provinces 2001 Financial institutions are allowed to issue bonds in the international markets WTO accession 2002 QFII scheme allowing foreign investment in domestic stock and bond markets Offshore Rmb settlement infrastructure created in Hong Kong SAR 2004 Deposits-taking and exchange for uals and designated merchants in g Kong SAR 2006 QDI scheme relating to mainland portfolio nvestment abroad 2007 Chinese financial institutions allowed to issues RMB bonds in Hong Kong SAR 2008 Mainland banks allowed to provide loans to firms for use in cross-border m&A 2009 Trade settlement in Rmb allowed 2010 Foreign companies were authorized to issue RMB-denominated bonds in Hong Kong SAR 2011 Trade settlement scheme expanded ODI settled in RMB RMB 2012 RMB QFII allowed 2013 Creation of Qianhai special economic zone here the two cross-border rMB lending is allowe RMB QFII scheme expanded 1010 The econometric analysis in Section III suggests that capital account liberalization measures have played a decisive role in advancing offshore use of the renminbi. However, the Chinese authorities’ willingness to implement such measures depends on the effect on mainland capital flow and whether it is consistent with their broader objectives. To assess this, we look at the pattern of capital flows associated with liberalization. How this has affected bilateral flows with Hong Kong SAR given its central role? And, finally, how measures may need to evolve relative to those in Table 2 to sustain the process? Table 2. Key Mainland China Capital Account Liberalization Measures Date Measures liberalizing flows in general …and renminbi-denominated flows 1980 Special Economic Zones to promote trade and attract FDI 1984 Some coastal cities opened to FDI 1993 Mainland firms listed in Hong Kong SAR (in Hong Kong dollars) 1999 FDI liberalization extended to all provinces 2001 Financial institutions are allowed to issue bonds in the international markets WTO accession 2002 QFII scheme allowing foreign investment in domestic stock and bond markets 2003 Offshore RMB settlement infrastructure created in Hong Kong SAR 2004 Deposits-taking and exchange for individuals and designated merchants in Hong Kong SAR 2006 QDII scheme relating to mainland portfolio investment abroad 2007 Chinese financial institutions allowed to issues RMB bonds in Hong Kong SAR 2008 Mainland banks allowed to provide loans to firms for use in cross-border M&A 2009 Trade settlement in RMB allowed 2010 Foreign companies were authorized to issue RMB-denominated bonds in Hong Kong SAR 2011 Trade settlement scheme expanded ODI settled in RMB RMB FDI permitted 2012 RMB QFII allowed 2013 Creation of Qianhai special economic zone where the two-way cross-border RMB lending is allowed RMB QFII scheme expanded