RMB partly convertible under capital account
(Xinhua)
Updated: 2004-11-09 00:53

Chinese currency Renminbi (RMB) has realized partial convertibility under capital account, and of the 43 capital trading categories classified by the International Monetary Fund, about half have no restrictions or very few restrictions in China, a senior official said Monday.

Addressing the opening function of HSBC's 14th central bank annual meeting, Wei Benhua, deputy director of the Chinese State Administration of Foreign Exchange (SAFE), said Monday it is the long-term goal of China's reform on foreign exchange (forex) administration system to achieve complete convertibility of RMB. In 1996, RMB became convertible under current account, and the opening of capital account is currently being advanced in an active and orderly way.

He said China has initially formed the situation of cross- border capital flow to both directions, trading volume under capital account has been expanding rapidly.

Complete convertibility under capital account is an issue that every country must face when its economy develops to a certain stage and begins to participate in world cooperation and competition, he acknowledged. Especially when current account is open, the controlling efficiency on capital flow will continuously decrease, and the opening of capital account has become an inevitable outcome of a country's joining into global economy.

According to Wei, the policy goal of the Chinese government is to ease restrictions on cross-border capital trading activities in a selective and step-by-step way while effectively preventing financial risks, so as to gradually realize the convertibility of RMB under capital account.

With the launching of new measures regarding capital flow, he added, China's capital account will open further, so as to create conditions for cross-border capital flow and the development of China's capital market.

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