China will continue developing and opening up its financial market, central bank Governor Zhou Xiaochuan reiterated yesterday.

"We will continue our efforts to develop our financial market and widen it gradually during the development," Zhou said at the Sino-French Financial Forum in Beijing.

He said China has made progress in opening up its financial sector.

By the end of June, 71 overseas lenders had set up 214 branches in the country able to conduct corporate renminbi business in 25 cities.

A total of 26 overseas financial institutions had invested in 18 Chinese banks, with a combined investment of US$17.9 billion.

In addition, 23 foreign-invested fund management joint ventures and eight foreign-invested brokerages had been established by the end of June.

And 42 overseas institutions had been approved to invest in China's A-share market under the qualified foreign institutional investor programme, Zhou told the forum.

The country will allow overseas lenders to deal with renminbi retail business at the end of this year in line with its World Trade Organization (WTO) commitment.

The banking regulator is currently working out the administrative rules on foreign banks.

While observing its WTO commitment, the country will also adopt opening and reform measures to meet the needs of market development, he said.

"The government will gradually loosen its control over the renminbi's capital account convertibility and push for free convertibility of the yuan in a stable manner," Zhou said.

Currently the country has no timetable for widening the yuan's trading band. "It depends on whether the band is enough for the market," he said, responding to questions seeking details of the band widening.

Also during yesterday's financial forum, Xiang Huaicheng, head of the National Social Security Fund, revealed that the fund plans to invest an initial 1 billion yuan (US$125 million) in the Bohai Industrial Investment Fund.

The Bohai fund, the first such equity fund in China, is being prepared and may be established at the end of September or later, the China Securities Journal reported earlier, citing the Mayor of Tianjin Municipality Dai Xianglong.

The Chinese newspaper said the fund's total scale will be 20 billion yuan (US$2.5 billion), with an initial investment of 6 billion yuan (US$750 million).

"If the Bohai fund is proved a success, the national social security fund will look to expand into other such investment funds in the future," Xiang told reporters. The fund will also start investing abroad soon, with European markets among potential destinations, he said.

By the end of August, the social security fund had total assets of 230 billion yuan (US$28.75 billion) and had invested in a variety of financial instruments on the domestic market including bank deposits, stocks, bonds and trust funds.

(China Daily September 22, 2006)