China to liberalise yuan in experimental economic zones
Beijing plans to liberalise the yuan's capital account in the state-level economic development zones, the latest sign that it is intent on deepening financial reforms.
Beijing plans to liberalise the yuan's capital account in the state-level economic development zones, the latest sign that it is intent on deepening financial reforms.
The State Council said in a circular yesterday that qualified experimental zones across the mainland would be allowed to conduct full convertibility of the yuan and encouraged to promote cross-border use of the currency.
Policy details were not given in the document distributed to ministry-level authorities and provincial-level governments.
A convertible yuan under the capital account could facilitate cross-border investments in industrial projects, property purchases and acquisitions, boosting economic activity in the more than 200 experimental zones.
"It is the latest sign that Premier Li Keqiang hopes to bolster fund flows," said Guo Tianyong, a professor at the Central University of Finance and Economics. "But the announcement appears to be vague and a clearer operating guide is necessarily needed."
The yuan is not yet fully convertible in the Shanghai free-trade zone, the first such zone that has been designated a reforms testing ground.
President Xi Jinping said last month the pilot zone scheme should be expanded nationwide.
Wang Jinxia, a spokesman for the Qianhai economic zone in Shenzhen, said it would continue to follow regulatory requirements to explore yuan convertibility under the capital account.
Beijing has been striving to internationalise the yuan in line with the nation's increasing economic clout.
"In the free-trade zone, cross-border capital flows are still under strict oversight of the regulators," said an official with the Shanghai Zhangjiang Hi-tech Park. "Indeed, the companies based in the development zones will certainly benefit from a loosened regulation on capital flows."
