China’s capital account opening is on ‘a stable path’: economist
Prominent economist Ba Shusong suggests expanding Shanghai-Hong Kong stock connect model to the bonds and commodities markets
The opening up of China’s capital account was on a “prudent and steady” path, a prominent Chinese economist said on Monday.
Beijing was doing more to encourage capital inflows while being cautious in opening outflow channels, said Ba Shusong, chief China economist of Hong Kong Exchanges and Clearing Ltd and a former senior researcher with the State Council’s think tank. He was speaking on the second and final day of the Lujiazui Forum in Shanghai.
He said the Shanghai-Hong Kong stock connect model could be replicated elsewhere as China continued to open its capital account.
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It could be expanded to the bonds and commodities markets, as part of a broader initiative to open the capital account, he said.
The People’s Bank of China ended its soft peg to the greenback in August 2015 by devaluing the yuan nearly 3 per cent and reforming it to fluctuate against a basket of currencies of major trading partners including the United States, Britain, South Korea, and Japan.
Investors are seeking better returns elsewhere due to expectations of interest rate increases in the US, China’s sluggish economic performance, and a weaker yuan.
Last month, the mainland’s foreign exchange reserves fell to US$3.19 trillion, the lowest level since December 2011. The forex reserves fell by US$27.9 billion in May, after rising for two straight months in March and April.