Being a founding member of the European Union and home to some of its institutions, Luxembourg is one of the largest European Union centres for finance activities and investment, and a well-formed and regulated portal into the European Union.
Since the foundation of diplomatic relations in 1972, Luxembourg and China have forged very close ties in a category of areas including finance. In 1979, Luxembourg became the first country in the world to host a bank from the People’s Republic of China. Today, six of China’s biggest banks have selected Luxembourg as their European center to accompany their clients across the continent.
Chinese investor’s attraction to Luxembourg
For years, Luxembourg and China have enjoyed an ideal and strong relationship. Thanks to this, Luxembourg has brought in more and more capital from China investors over the years.
- Being a small country has also given the Grand Duchy a degree of political and economic impartiality, which is the main factor in opening the country to Chinese authorities. And Luxembourg is highly respected for its open financial environment.
- Being a leading EU center of expertise in the area of cross-border wealth management, Luxembourg provides financial actors access to a large market infrastructure of essential services such as the Luxembourg Stock Exchange (LuxSE).
- Over many years, Luxembourg has formulated an entire ecosystem dedicated to cross-border financial services, and building on this expertise, the financial centre has become a deluxe European hub for the internationalisation of the Chinese currency.
- Its relaxed immigration systems have also resulted in a significant percentage of the financial sector being occupied by non-natives, enabling organizations to speak to clients in different languages and be sensitive to cultural differences.
- In 2008, a Memorandum of Understanding was signed between the Luxembourg and China, which allows qualified domestic institutional investors (QDII) to invest in Luxembourg-registered investment vehicles.
As stated above, not only is the relationship between the two countries stronger than ever, but Luxembourg goes on providing adequate opportunities for growth of the Renminbi business.
Strong ties between Luxembourg and China
Luxembourg’s ties with the People’s Republic of China have become increasingly strong as Chinese top-tier banks, fund management companies and international companies have inaugurated their European domicile’s and headquarters in Luxembourg in order to gain from its business-friendly environment, hence contributing to Luxembourg becoming one of the biggest Renminbi centres outside the People’s Republic of China.
In conclusion, it is likely that Luxembourg will continue to be the favorite among Chinese investors.
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