The International Monetary Fund's (IMF) decision to start encouraging all countries to liberalise capital flows should not be too hasty in the case of China, a senior World Bank official said yesterday.
Beijing, which this year introduced current account convertibility for the first time, still has immature banking and financial systems, and early capital account convertibility would be inadvisable, said Nicholas Hope, director of the China and Mongolia department of the World Bank.
Earlier this week, the IMF's policy-making interim committee agreed to give it jurisdiction for the first time over the capital account, which affects the flow of capital into and out of a country.
China has been one of the largest beneficiaries of capital flows in recent years - recording US$40 billion of net private flows last year alone - but it still retains restrictions on how much can be remitted out of the country.
Mr Hope said an immediate move to capital account liberalisation for China would be 'premature to say the least'.
Under the decision by the interim committee, the IMF said that it hoped to have recommendations in time for its annual meetings in Hong Kong in September, proposing certain transition periods for countries unable to convert immediately.
