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'Chance' to open capital account

By Wang Xiaotian (China Daily)

09:33, February 24, 2012

A branch of the People's Bank of China in Hefei, the capital city of Anhui province. The PBOC says China wouldn't face huge risks if it opens up the country's capital account, a goal that was included in the 12th Five-Year Plan (2011-15).(Photo/China Daily)

Waiting for perfect timing could mean reform 'never' happens: Study

BEIJING - China has a "strategic opportunity" to ease curbs on capital flows to take advantage of lower valuations for Western companies and raise the yuan's global status, a central bank study has suggested.

China doesn't face great risks if it opens up its capital account, a goal that was included in the 12th Five-Year Plan (2011-15), the People's Bank of China publication Financial News reported on Thursday, citing a study by the survey and statistics department.

"If we wait until conditions for interest rate liberalization, currency liberalization and yuan internationalization all mature, we might never find an appropriate time to open up the capital account," said the report, written under the direction of head researcher Sheng Songcheng.

"Now is the time to do so because low valuations in overseas markets offer a rare investment opportunity for Chinese companies."

The Stoxx Europe 600 Index, even with an 8 percent rally this year, has fallen 34 percent since July 2007, driven down by global financial turmoil and the eurozone debt crisis.

"Too much emphasis on preconditions could easily make (a process of) gradual reform become negative and stationary, thus delaying the right time," the report said, adding that those presumed "preconditions" and the full convertibility of the yuan could promote one another simultaneously.

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