Aggressive steps to boost yuan
Source: Xinhua |
July 6, 2012, Friday
|
Print Edition
Print Edition
NEARLY 10 years after China started to relax some of its capital controls, the country is now making more aggressive steps toward that end.
The country's top economic planner last week unveiled a raft of measures for Shenzhen, which borders Hong Kong, including trials for cross-border loan issuances to boost the free conversion of the yuan.
The measures also cover issues related to taxation, education, medical treatment, telecommunications, legal matters and the introduction of new talent, according to the National Development and Reform Commission.
China vowed in 2003 to gradually ease its grip on cross-border capital flow and ultimately open its capital account as part of the country's efforts to turn the yuan into a global reserve currency.
A cooperative zone in Qianhai Bay, approved in 2010 by the State Council, or China's cabinet, is part of the government's plan. The zone was approved to promote cooperation between Hong Kong and Shenzhen, two major financial centers.
The zone will provide new investment channels for Hong Kong's yuan deposits, boosting the region's status as an offshore yuan center.
Hong Kong banks will be able to conduct cross-border yuan financing, which will play a crucial role in promoting offshore yuan business in the city, said Xie Guoliang, a senior analyst for Bank of China Hong Kong.
Timing is right
"There will be new challenges concerning transactions of personal assets and derivatives. We must make sure that banks are ready for cross-border risks," said Pei Chuanzhi, president of the China Foreign Exchange Trade System.
In view of the current environment at home and aboard, both the timing and conditions are right for China to make the yuan freely convertible under the capital account, said Zhao Xijun, deputy dean of the School of Finance at Renmin University.
China's rise as a global economic power has made its currency more attractive, especially after the global financial crisis in 2008, which has led to a persistent economic slump in the United States and debt woes in the eurozone.
Some economies and regions have adopted the yuan as an official exchange reserve currency, while others are actively expanding the yuan's use in cross-border trade settlements with China.
The yuan has now become the world's third largest trade settlement currency, with the share of yuan settlements amounting to 7 percent of China's goods trade and 15 percent of its service trade.
"Obviously, the yuan has a long way to go to become an international reserve currency. There is a mismatch between the yuan's global status and China's economic strength," said Gao Guoxi, a professor at Fudan University in Shanghai.
The US dollar, the euro, the British pound and the yen are the major global reserve currencies, with 60 percent of global exchange reserves in dollars.
The country's top economic planner last week unveiled a raft of measures for Shenzhen, which borders Hong Kong, including trials for cross-border loan issuances to boost the free conversion of the yuan.
The measures also cover issues related to taxation, education, medical treatment, telecommunications, legal matters and the introduction of new talent, according to the National Development and Reform Commission.
China vowed in 2003 to gradually ease its grip on cross-border capital flow and ultimately open its capital account as part of the country's efforts to turn the yuan into a global reserve currency.
A cooperative zone in Qianhai Bay, approved in 2010 by the State Council, or China's cabinet, is part of the government's plan. The zone was approved to promote cooperation between Hong Kong and Shenzhen, two major financial centers.
The zone will provide new investment channels for Hong Kong's yuan deposits, boosting the region's status as an offshore yuan center.
Hong Kong banks will be able to conduct cross-border yuan financing, which will play a crucial role in promoting offshore yuan business in the city, said Xie Guoliang, a senior analyst for Bank of China Hong Kong.
Timing is right
"There will be new challenges concerning transactions of personal assets and derivatives. We must make sure that banks are ready for cross-border risks," said Pei Chuanzhi, president of the China Foreign Exchange Trade System.
In view of the current environment at home and aboard, both the timing and conditions are right for China to make the yuan freely convertible under the capital account, said Zhao Xijun, deputy dean of the School of Finance at Renmin University.
China's rise as a global economic power has made its currency more attractive, especially after the global financial crisis in 2008, which has led to a persistent economic slump in the United States and debt woes in the eurozone.
Some economies and regions have adopted the yuan as an official exchange reserve currency, while others are actively expanding the yuan's use in cross-border trade settlements with China.
The yuan has now become the world's third largest trade settlement currency, with the share of yuan settlements amounting to 7 percent of China's goods trade and 15 percent of its service trade.
"Obviously, the yuan has a long way to go to become an international reserve currency. There is a mismatch between the yuan's global status and China's economic strength," said Gao Guoxi, a professor at Fudan University in Shanghai.
The US dollar, the euro, the British pound and the yen are the major global reserve currencies, with 60 percent of global exchange reserves in dollars.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
