There have been a lot of renminbi-market developments in the last two years, particularly the past three months, noted Eric Chow, deputy head of business development at HSBC, this week.

But asset managers – speaking at the 'RMB Rising' conference run by AsianInvestor and FinanceAsia in Hong Kong this week – are still waiting for further clarification on issues such as RMB usage and conversion.

“Since July we've been seeking info about conversion limitations, what RMB funds can be used for,” said Chow. “At the moment, our choices are quite limited. So in the short term the situation is quite challenging.”

As for the kind of products fund managers are likely to launch, mainland firm Harvest Fund Management is waiting for the regulator to publish further details on how RMB usage and repatriation will work.

Mao Shuguang, head of product management at Harvest Global Investments (the Beijing based fund-management company’s Hong Kong branch), notes the huge interest in accessing the RMB market.

The firm’s focus will be on retail funds, he adds, and demand has been high for expected quotas to invest in A-shares via RMB-denominated 'mini-QFII'. Mao cites an increase of Rmb30 billion in renminbi deposits in August, as reported by the Hong Kong Monetary Authority.

The government is getting more serious about the issue, he adds, citing for instance that the People’s Bank of China now has a department focused on the internationalisation of the renminbi.

“But it can't be done in a day,” he says. “Capital controls need to be freed up so that money can flow into and out of China.”

One major development en route to greater relaxation of capital and investment controls is that the qualified foreign institutional investor regime is likely to be replaced by a “free-market investing scheme”, says Mao. In principal, it will allow the free flow of inbound investments, but there will be restrictions.

It will be probably three-to-five years before the QFII regime switches to the new set-up, suggests Mao, although investment restrictions will continue to ease before then.

Meanwhile, “at some point we can expect full free flow of capital”, he says, but not for 10 years or so – and some say it will take as long as 20 or 30 years.

Asked how he thought things would pan out in the shorter term, Mao turned his attention specifically to the mini-QFII regime, the rules of which have yet to be published. The industry had expected these to come this year, but now the consensus is for spring 2011.

Mao questioned the term 'mini-QFII', suggesting a better title would be ‘QOCII’ – the qualified overseas China institutional investor scheme – because under the rules, overseas institutional investors will be able to facilitate investments of offshore RMB deposits back into mainland capital markets.