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SAFE encourages yuan settlement for cross-border trade
By Zhang Fengming |
March 8, 2011, Tuesday
|
Online Edition
Online Edition
CHINA will deepen the reform of its capital account and encourage yuan-dominated cross-border trade, the State Administration of Foreign Exchange said today.
SAFE outlined its 2011 priorities in a statement on its website yesterday, including more inspections and reviews of its cross-border capital and crackdown on illegal "hot money."
The key message is to open up China's capital account to legal capital flow and to squeeze out speculative capital.
China's current account, or that for trade, is fully convertible. But the capital account, or that for investment, has yet to open up.
China's gradual reform of its capital account is crucial in making the yuan a global currency in the long haul, analysts said. The process is picking up speed as the cross-border trade made in yuan reached 506.3 billion yuan (US$76.7 billion) in 2010.
By the end of 2010, more than 67,000 companies in 20 Chinese provinces and municipalities had joined the yuan settlement program.
The off-boarder accumulation of yuan through the yuan settlement program is seeking legal ways to flow back to China for higher returns.
Five overseas companies were allowed to invest in China's inter-bank bond market with a combined quota of 29.2 billion yuan at the end of last year.
Meanwhile, SAFE will work with other departments to push for openness of the capital market, it said.
SAFE officials said earlier that the international board of Shanghai Stock Exchange was expected to be launched this year.
The international board will allow foreign companies to raise capital through selling yuan-backed shares.
China is aiming to build Shanghai into a global financial center by 2020 on par with the global status of its currency.
Also today, China's central bank said it would roll out a package of measures to ensure more credit for projects related with people's living. Credit to small and medium-sized companies, less developed areas and job creation will be boosted.
SAFE outlined its 2011 priorities in a statement on its website yesterday, including more inspections and reviews of its cross-border capital and crackdown on illegal "hot money."
The key message is to open up China's capital account to legal capital flow and to squeeze out speculative capital.
China's current account, or that for trade, is fully convertible. But the capital account, or that for investment, has yet to open up.
China's gradual reform of its capital account is crucial in making the yuan a global currency in the long haul, analysts said. The process is picking up speed as the cross-border trade made in yuan reached 506.3 billion yuan (US$76.7 billion) in 2010.
By the end of 2010, more than 67,000 companies in 20 Chinese provinces and municipalities had joined the yuan settlement program.
The off-boarder accumulation of yuan through the yuan settlement program is seeking legal ways to flow back to China for higher returns.
Five overseas companies were allowed to invest in China's inter-bank bond market with a combined quota of 29.2 billion yuan at the end of last year.
Meanwhile, SAFE will work with other departments to push for openness of the capital market, it said.
SAFE officials said earlier that the international board of Shanghai Stock Exchange was expected to be launched this year.
The international board will allow foreign companies to raise capital through selling yuan-backed shares.
China is aiming to build Shanghai into a global financial center by 2020 on par with the global status of its currency.
Also today, China's central bank said it would roll out a package of measures to ensure more credit for projects related with people's living. Credit to small and medium-sized companies, less developed areas and job creation will be boosted.
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