China Sets to Loosen Forex Controls

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Last updated at: (Beijing Time) Saturday, March 08, 2003

China Sets to Loosen Forex Controls

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A senior official in charge of foreign exchange administration said here Saturday that China is studying the possibility of allowing some non-banking financial institutions to invest in overseas securities market.

Guo Shuqing, director of the State Administration of Foreign Exchange (SAFE) and member of the Chinese People's Political Consultative Conference, said that the SAFE and other related departments are considering loosening controls on investment in overseas securities market, adding that a few qualified domestic institutional investors may be allowed to operate part of their assets in overseas market.

He said that the loosening of restrictions on the transfer of lawful private assets to foreign countries is also being considered. Emigrants will be allowed to turn their assets into foreign exchange and send it abroad after proving that the assets are legitimate.

He said that related departments have carried out research on a number of forex administrative issues under capital account, in an effort to adapt to the new situation.

In the second half of 2002, China adopted a policy to allow qualified foreign institutional investors to trade on Chinese securities markets, which was viewed as a breakthrough in China's forex control policies and a positive factor in the slump securities market.

China pursues a prudent and gradual way in opening its capital account. In 1996 China made its currency, the Renminbi, convertible under current account. Since then, restrictions on nearly half of the forex trading categories under capital account have been lifted or loosened.

Guo said that actually Renminbi is already partly convertible under capital account, but there is no timetable for a total convertibility.

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