Furthermore, the city has a strong entrepreneurial tradition, and Wenzhou entrepreneurs have visited many places in the world, laying a solid foundation for the personal cross-border direct investment pilot project.
The project will be gradually expanded from a single city to Zhejiang province and the whole country in order to promote the overseas expansion of China's manufacturing sector and private economy, which will serve as a necessary complement to state-owned enterprises expanding internationally.
The Wenzhou personal direct overseas investment pilot project will also promote the convertibility of the yuan under the capital account. The reform of China's foreign exchange management system will focus on lifting capital controls and achieving full convertibility of the yuan.
A country normally lifts capital controls on public institutions and companies firstly, and then on individuals. However, China used to adopt a "lenient entry, stringent exit" foreign exchange management system, and imposed stricter investment restrictions on domestic residents than on non-residents.
In order to establish a balanced system, China should ease capital controls on domestic institutions, companies, and individuals to meet their normal needs of making investment abroad. The Wenzhou pilot project will help strike a balance between capital inflows and outflows.
Suitable supporting policies are crucial to successful implementation of the pilot project. As China's capital account is not fully open yet, the pilot project in Wenzhou will be limited to direct overseas investment, but authenticity test and other regulatory measures remain necessary.
While streamlining the examination and approval procedures, related government agencies should facilitate financing for interested individual investors and provide necessary investment guidance without dampening investors' enthusiasm.
Read the Chinese version at http://paper.people.com.cn/rmrbhwb/html/2012-03/31/content_1030039.htm