China will maintain its push to open its capital account despite recent yuan volatility, and boost oversight of cross-border capital flows, the Economic Daily quoted a senior official with the State Administration of Foreign Exchange as saying. "While further promoting capital account convertibility, we will focus on building a macro-prudential regulatory framework for cross-border capital flows," Guo Song, head of the foreign exchange regulator's capital account department, was quoted as saying.
Guo said China will extend efforts to promote capital account convertibility, despite recent currency volatility and major shifts in global liquidity and China's economic environment. Chinese officials have not given a fixed timetable for making the yuan freely tradeable and market watchers believe authorities, faced with renewed pressure on the yuan, have reinforced capital controls in recent months in a bid to stem fund outflows.
The yuan hit six-year lows on Friday, on course to post its biggest fall since August last year, when the central bank unexpectedly devalued the currency, spreading turmoil in global financial markets. Further capital account opening will help expand the channel for capital inflows and keep a balance in China's international payments, Gao said. The regulator is studying plans to allow cross-border asset transfers and improve management on foreign exchange loans, he said. China has basically met most requirements for full capital-account convertibility set by the International Monetary Fund, excluding areas of stock issuance by foreigners, money market instruments and financial derivatives, he said.