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The Renminbi (RMB), the currency of China, has realized partial convertibility under capital account, and of the 43 capital trading categories classified by the International Monetary Fund, about half have no or very few restrictions, a senior official said Monday.
At the opening of HSBC's 14th central bank annual meeting, Wei Benhua, deputy director of the Chinese State Administration of Foreign Exchange (SAFE), said it is the long-term goal of China's reform of its foreign exchange (forex) to achieve complete convertibility of the RMB.
In 1996, the RMB became convertible under current account, and the opening of capital account is currently being advanced progressively.
Wei said China established cross-border capital flow in both directions, and trading volume under capital account has been expanding rapidly.
Complete convertibility under capital account is an issue that every country must face when its economy develops to a certain point and begins to participate in world cooperation and competition, he acknowledged. Especially when current account trading is open, the controlling efficiency on capital flow will decrease, and the opening of capital account has become inevitable in joining the global economy.
According to Wei, the goal of the Chinese government is to ease restrictions on cross-border capital trading activities in a selective and step-by-step way while effectively preventing financial risks, so as to gradually realize the convertibility of RMB under capital account.
With the launch of new measures regarding capital flow, he added, China's capital account will open further, so as to create good conditions for cross-border capital flow and the development of China's capital market.
(Xinhua News Agency November 9, 2004)
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