China's foreign exchange administrator is considering bringing in new regulations after China enters WTO.
The changes are expected to cover the activities of foreign banks and foreign-funded ventures in China, said Zou Lin, deputy director of the International Payment Department of the State Administration of Foreign Exchange. He was speaking Thursday in Beijing at a seminar focusing on China's financial reforms.
According to WTO requirements, foreign funded-ventures and domestic firms should be treated the same in foreign exchange regulations after China joins the body.
At present, foreign-funded ventures enjoy preferential treatment in terms of foreign exchange accounts, hard currency settlements, foreign debt borrowing and in other areas, Zou said.
For example, foreign-funded ventures can open foreign exchange accounts in banks and do not have to get the approval from the State when they borrow money from abroad.
They are also allowed to retain a certain amount of their foreign exchange earnings.
But domestic firms have to apply for State approval if they want to borrow money abroad.
And they are required to sell their foreign exchange earnings to designated banks. Only a small number of domestic firms are allowed to keep a certain amount of their foreign exchange earnings.
"We need to cautiously consider the differences between domestic firms and foreign-funded ventures,'' Zou said.
He added that China's foreign exchange supervision ability is not yet strong enough to allow domestic firms to be treated the same as foreign-funded ventures.
He also said abolishing preferential policies for foreign-funded ventures would affect the country's favourable environment for foreign investment.
"We want to keep polices aimed at improving foreign investment while allowing domestic firms enjoy the same rights,'' Zou said, but he did not reveal what changes would be made.
Zou said foreign banks would be included in the country's management system for foreign exchange designated banks after China's entry into the WTO as their businesses would then cover all kinds of firms not just foreign-funded ones.
Foreign banks will be given the same treatment as domestic banks in the authorization of foreign exchange buying and selling, international payment declaration and accounting items.
He said foreign banks' overseas borrowing and capital from their overseas headquarters will come under the country's national foreign debt management.
Zou said the size of China's international payment would increase considerably after the country's entry into the WTO.
He predicted China's imports would rise sharply with a reduction in tariffs. But it would be unrealistic to expect a sharp rise in exports, he added.
(China Daily)
