China's capital account will not be liberalised and the yuan will not become freely convertible until 2006 despite World Trade Organisation membership, according to a report by Nomura International.
Mainland authorities would retain exchange control measures until systems ensuring monetary stability had been put in place, the report said.
'China's controlled capital account system, while saddled with shortcomings, has served the country well so far,' senior economist Pu Yonghao of Nomura International said.
'We believe this policy has helped to prevent an outflow of capital, implement a highly effective monetary policy, preserve public confidence in the domestic financial system and protect the country from the contagion of the Asian financial crisis.'
The report said WTO membership would bring China an extra 0.5 percentage point in annual gross domestic product growth until 2006, taking total GDP to 15.5 trillion yuan (HK$14.52 trillion) from 8.9 trillion yuan in 2000.
China's foreign trade would also double to more than US$1 trillion by 2006, with exports growing 15 per cent a year from this year to 2006.
