The government is
encouraging foreign investors to hold RMB - denominated
assets, and dealing in the country's domestic currency allows businesses operating in or trading there to minimize transaction costs.
While the liberalizing reforms usually undermine the ability of the elite to capture a disproportionate share of growth, in other words, because the reforms often seem to
encourage massive
foreign capital inflows, and these push up the price of
assets largely controlled by the elite, political opposition to the reforms is weakened.
It is also
encouraging to see that Vanguard says in its prospectus that the
foreign equity ETFs may also invest its
assets directly in stocks that make up the index.