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China to gradually make yuan fully convertible
(Agencies)
Updated: 2005-06-06 11:57
China will gradually make its currency, the yuan, fully convertible, Vice
Premier Huang Ju has said, addressing one of the key concerns of the
world economy.
Chinese Vice
Premier Huang Ju speaks to the International Monetary Conference, a
grouping of senior commercial bankers, in China's capital Beijing June 6,
2005. Huang said that China will gradually push for the full
convertibility of the yuan in a restatement of long-standing government
policy. [Reuters] |
"We will relax restrictions on yuan transactions under the capital account in
a step-by-step manner in order to achieve gradual capital account
convertibility," he told a banking conference in Beijing.
The yuan is convertible on the current account for trade in goods and
services, but not on the capital account, which includes items such as direct
investments, international loans and securities investments.
The yuan is effectively pegged at 8.28 to one US dollar. China's major
trading partners have been pressing it to make its foreign exchange regime more
flexible.
Huang also said that China will meet its obligations to the World Trade
Organization to open up its financial sector to foreign institutions.
Beijing will encourage foreign firms to take part in the reform of
state-owned companies in general and to play a role in reforms in the lagging
inland provinces in particular.
Huang said banking reforms, including the restructuring of state-owned China
Construction Bank, have already produced results.
Risk controls and earnings are improving at the bank as well as other state
institutions, he said.
China's financial regulators have encouraged a restructuring of the bank with
a major recapitalization program.
In addition to injecting fresh capital, Beijing has encouraged tie-ups with
foreign strategic investors ahead of a stock offer and flotation.
Huang said Beijing will also push forward reforms of other financial
institutions but he did not give details.
China has also been moving ahead with reforms of the Bank of China and the
Industrial and Commercial Bank of China.
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