The Chinese yuan, also known as the renminbi, is already convertible under the current account - the broadest measure of trade in goods and services. However, the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing because of worries about abrupt capital flows.
Mainland car dealers fall up to 7.5pc
Hong Kong shares of major car dealers dropped yesterday after mainland officials played down reports that more incentives to boost the market were in the pipeline.
Zhongsheng, Zhengtong, Baoxin and Dah Chong Hong all fell about 2 per cent to 7.5 per cent, on a day the Hang Seng index edged up 85 points. The market had been expecting the renewal of an old policy to subsidise rural farmers to replace their old cars, but an official from the mainland's top economic planner said no such policy was in the offing.
'The issue has to be studied closely, such as what vehicle types are eligible,' Chen Jianguo, deputy director of the National Development and Reform Commission's industry co-ordination department, was quoted as saying by Bloomberg. 'There's not much sense in subsidising farmers to drive sedans.'
Chen said even if there was indeed a need to renew the cash-for-clunkers scheme, it would not be on the scale of 2009, when farmers were offered up to 5,000 yuan (HK$5,670) to buy a new car and another 3,000 yuan if they replaced an old one.
Meanwhile, questions are being raised about the efficacy of a policy to reduce municipal government expenses on public vehicles, considering local administrations may now have to spend more to foot staff transport fares.
The Wenzhou city government sold 215 government vehicles on Sunday - part of a 1,300-strong fleet that it planned to dispose of in six batches by the end of next month - to cut down expenses on public cars. But according to China Business News, one government department paid its staff 135,000 yuan in transport subsidies last month. That would amount to 1.62 million yuan in subsidies in a year, which would in turn exceed the 1.44 million yuan spent last year on maintaining the public fleet.