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People's Daily Online>>China Business

China to widen channel for capital outflow

By Yang Xun (The Economic Daily)

13:53, April 13, 2012

Edited and translated by People's Daily online

China will steadily promote the convertibility of the yuan capital account step by step, the State Administration of Foreign Exchange of China (SAFE) said on April 10.

The SAFE said that it will expand the use of the yuan in cross-border trades and investments according to relevant standards, gradually widen the channel for the capital outflow, encourage qualified domestic organizations to “Go Global,” and relax the restriction on domestic residents' overseas investments. It will also gradually strengthen the openness of China's domestic financial market and establish systems and mechanisms resisting impacts from the double-flow of cross-border capitals.

The SAFE said that the convertibility of the yuan capital account, as an important part of China's foreign exchange management system reform, is not an ultimate goal. Realizing the convertibility of the yuan capital account is a gradually-proceeding course and a systemic project involving many departments. It needs relevant reforms to be promoted in coordination to improve the China's capacity of coping with external impacts.

The SAFE said that, while promoting the convertibility of the yuan capital account, it will pay close attention to both domestic and external economic development situations so that the measures of promoting the convertibility will suit China's economic development phase, market growth level, enterprise endurance, financial management level and the international financial environment. While relaxing some restrictions, the SAFE will also keep improving and strengthening the cautious macro-management, further improve the statistics, monitoring and early-warning on cross-border capital flows, effectively handle impacts from capital flows and safeguard the national economic and financial security.

In the end of September 2011, the total asset balance of foreign countries' direct investments in China was 1.6 trillion U.S. dollars and the total asset balance of China's direct investments in foreign countries was 345.5 billion U.S. dollars, up 1.65 times and 2.81 times compared to those in the end of 2006.

By March 9 of 2012, the SAFE had approved 24.6 billion U.S. dollars of investments from 129 qualified foreign institutional investors (QFII) and 75.2 billion U.S. dollars from 96 qualified domestic institutional investors (QDII).

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