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.
Toothpick sellers fined for lacking logging licence
With reports of toothpick sellers being fined thousands of yuan for not having a logging licence, hundreds of owners of small shops in the provincial capital of Liaoning have chosen to close their doors for fears they could be the next victim of a city government crackdown.
The government launched an inspection of Shenyang stores in June, as the northeastern city prepares to host next year's 12th National Games - which mainland media said has appeared to stretch the city's treasury thin.
While officials say they are conducting an anti-counterfeit campaign, accusations are surfacing that the government is using the inspections to raise funds for the National Games.
Some shop owners said they were opting to be safe rather than sorry after word of other retailers' fines spread online.
Shenyang resident Liu Dexin told the Post yesterday that a friend who sells disposable wooden chopsticks was devastated after being fined 60,000 yuan (HK$73,500) for not having a logging licence.
'It's absurd to ask a chopsticks dealer to have a logging licence, and why wasn't my friend ever told to apply for such a licence?'
But Liu said that he considered his friend lucky after hearing that a seller of bamboo toothpicks was fined 200,000 yuan by government inspectors for the same violation.
He said that small shops were closing en masse, to the point that it was hard for residents to buy bottled water, much less find an affordable place to eat.
Chen Yong , director of Shenyang's Urban and Rural Construction Commission, has been quoted by Caixin.com as saying that the municipal government must build 18 venues and renovate a further 22 for the upcoming National Games.
The municipal government has not revealed the cost of staging the games, but the city reported a decline in tax revenue growth in the first five months of the year - rising only 11.3 per cent, to 22 billion yuan, far below its 19 per cent budget target.
Non-tax revenue, including administrative fines, went up by a whopping 56.5 per cent to 7.7 billion yuan during the same period.
The municipal government yesterday sought to contain the fallout via state media outlets, including the Liaoning Daily, by denying there was any clampdown.
A local reporter said on condition of anonymity that he was not sure whether a looming financial crunch was behind the crackdown.
However, he said that construction of some of the venues for the National Games, slated for September next year, had yet to get under way.
Another Shenyang resident who declined to give his full name said that despite the inconvenience in recent days, shop owners had learned to circumvent investigators by secretly opening in the evenings. And customers had soon cottoned on.
'It's almost certain that you will get a response at the door of a closed shop if you knock and ask for some groceries or a slab of bean curd,' he said.
'But it's both amusing and sad to have to push some cash into a shop via a narrow gap, and then see your purchases thrown out from underneath a closed door.'