Monday, November 30, 2015   

Full yuan convertibility urged

Grace Cao

Wednesday, May 22, 2013


People's Bank of China governor Zhou Xiaochuan and several high-ranking officials have co-authored a report urging full convertibility of the yuan capital account by 2015.

Failure to do so, they argue, will put Beijing at a disadvantage during global trade negotiations.

"China should outline a roadmap and timetable for yuan convertibility to be realized by 2015," Xinhua News Agency quoted a report, co-written by 40 senior financial sector officials and experts, as saying.

Among them are Zhou, former China Securities Regulatory Commission chief Guo Shuqing, China International Capital Corporation managing director Huang Haizhou and prominent economist Wu Jinglian.

Earlier this month, Premier Li Keqiang pledged at a State Council meeting to work out an "operational program" within the year to push ahead with yuan convertibility. But he did not give a timetable.

The report has surfaced as Beijing attempts to secure a better position at high- level international trade talks involving the United States, the European Union and Japan.

"The low convertibility of the capital account has hindered China's foreign trade and investment. To be compatible with the new trend in global trade talks, China should [mend this factor] by 2015," the report was quoted as saying.

In response to fears convertibility may spark more inflows of hot money, "the country could still control risks and maintain stability by managing suspicious capital, foreign debt and short-tern capital flow," it added.

Local economists have cast doubts on the 2015 target, saying it is too soon for full convertibility.

"But to allow a majority of capital accounts to open within two and a half years is a reasonable expectation," economist Liao Qun at CITIC Bank International said.

"Full convertibility could bring chaos. Foreign speculators may rush in and out of the A-share market," Liao warned.

"[The mainland's] financial markets are too fragile to deal with such freedom."

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