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People's Daily Online>>China Business

Report: Time is ripe for opening capital accounts

By Yang Xun (Beijing Daily)

09:25, March 01, 2012

Edited and translated by People's Daily Online

The conditions for accelerating the opening of capital accounts in China are basically mature and risks are now controllable, according to a report by a research group led by Sheng Songcheng, head of Financial Survey and Statistics Department of the Chinese central bank.

Currently, China has become the world's second largest economy and trading nation. It may miss the precious opportunity to open capital accounts if it waits until the conditions have become completely mature.

Opening capital accounts is a process of gradually relaxing capital control and allowing residents and non-residents to hold cross-border assets and engage in cross-border assets transaction so as to make the currency convertible. What influences will opening capital accounts have on ordinary investors and enterprises?

Residents are expected to have more investment channels.

The report shows that Chinese households have relatively fewer investment channels. As a result, a large amount of savings funds cannot preserve or increase the value. Opening capital accounts and increasing overseas household investment channels can promote the accumulation of household wealth and improve China's consumption standards.

The report, however, also indicates that individuals' overseas investment channels will only be opened in a later stage according to the capital account opening timetable and this issue will only be considered in at least five to ten years.

Opening capital accounts will enable ordinary residents to hold cross-border assets and have more investment and financing choices, but industrial experts noted that there are also risks.

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