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Guo Shuqing on China's capital account convertibility

By Li Zhenyu (People's Daily Online)

15:55, May 18, 2012

Guo Shuqing, Chairman of the China Securities Regulatory Commission (CSRC), delivers a speech at the International Organization of Securities Commissions (IOSCO) Annual Conference Wednesday in Beijing. (People's Daily Online/Li Zhenyu)

China's capital account is far more convertible than outside institutions believe, and now is a good time for China to make the yuan freely convertible, the top Chinese securities regulator said.

Guo Shuqing, Chairman of the China Securities Regulatory Commission (CSRC), delivered a speech with one of its focuses on China's capital account convertibility at the International Organization of Securities Commissions (IOSCO) Annual Conference Wednesday in Beijing.

China's achievements in the capital account convertibility have been evident over the years, said Guo.

According to Guo, 16 items in China's capital account are convertible, 17 are "basically" convertible and seven are "partially" convertible.

"There is no item that is inconvertible," said Guo. "China's capital account is actually far more open than is assumed under the estimations of various institutions such as the International Monetary Fund (IMF)."

Guo stressed that there is no absolute and unchangeable standard for use in measuring the openness of capital accounts.

"Countries in different phases of development must make their own analyses in accordance with their own methods of opening up and their own situations," he said. "It is necessary to be careful about the notion of 'fully free' convertibility. Convertibility under capital account doesn't mean there will be no capital control, no matter in any nations."

After the financial crisis, majority countries have reached a consensus to adopt a temporary method in capital control when imperative, and it should be regarded as an important principle in restructuring the international financial system, said Guo.

"Inaccurate notions from the past should be rectified as soon as possible," he said.

As for pushing forward the yuan's convertibility under the capital account, Guo said that current conditions are quite favorable for China to make the yuan freely convertible.

"Making the yuan a fully convertible currency is not only beneficial to China's economic and social development, but also bound to make a huge contribution to restructuring international financial system and improving global economic order," said Guo.

Beijing took a milestone step in liberalizing its currency regime last month, doubling the daily onshore trading band for the yuan to 1 percent, taking the country one step closer to its goal of achieving full convertibility of the yuan by 2015.

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