China's financial sector tipped to open further as authorities reaffirm support for Shanghai free trade zone
Central bank says zone will spearhead the move to make the yuan convertible, signalling freer cross-border capital flows are imminent
Beijing on Friday reaffirmed the role of the Shanghai free-trade zone (FTZ) as a pioneering area for bold liberalisations including the full convertibility of the yuan, a fresh sign that freer cross-border capital flows are imminent.
The People's Bank of China said that reforms, including the launch of a pilot scheme allowing individual investors to directly trade overseas stocks, were being studied to reinforce Shanghai's transformation into a global financial centre.
The central bank said the FTZ in Shanghai would spearhead the move to make yuan convertible under the capital account - a move to facilitate cross-border investments in equities, properties and production facilities.
It did not give a clear timeframe, saying the liberalisation would happen with a "step-by-step" approach.
The bank said the launch of the qualified domestic institutional investor (QDII2) scheme was being reviewed and would take place at an "appropriate time", a sign the long-heralded reform is in the pipeline.
The statement, jointly published by other ministry-level authorities such as the Ministry of Commerce, also mentioned that qualified investors would be allowed to trade equities and futures across the border while facilitating two-way commodity trading and direct investments to support the real economy.
"It is a clear message that the authorities are determined to deepen the financial reforms despite worries about China's hesitation to fully open its financial sector," said a Shanghai official. "The Shanghai FTZ will be further used as an important experimental ground for planned reforms."