China's economy may witness far-reaching changes in the next five years but progress towards capital account convertibility and internationalisation of the yuan will be gradual, central bank governor Zhou Xiaochuan said on Tuesday. In remarks to a meeting of the Institute of International Finance (IIF), Zhou said China's five-year plan for the period 2011-2016 would put the emphasis on promoting domestic demand, especially consumption.
To that end, accelerated urbanisation would create demand for non-export-related services such as healthcare and education. The thrust of China's investment strategy would also switch towards services from traditional sectors, Zhou added. "The economic structure may have quite a substantial change," he said.
Zhou, governor of the People's Bank of China, mentioned the yuan only in passing. Reform of the exchange rate regime would continue and China would proceed gradually to allow the yuan to be used in trade settlement and investment, he said. "For the next few years there will be a gradual approach to reaching capital account convertibility," he added, without going into detail. Zhou said energy efficiency and environmental protection would be another salient feature of the five-year plan, which was approved by the ruling Communist Party last month and will be unveiled in detail in March.