China is considering relaxing limits to allow individuals to invest overseas in stocks and property, the central bank said, which would potentially unleash a flood of money if the government loosens strict capital controls.
The People’s Bank of China said that it was studying letting “qualified” individuals invest abroad in industry, property and financial products through the Shanghai Free Trade Zone, according to a statement released on Friday.
“These policy initiatives are another important step toward complete capital account liberalization,” Zhou Hao (周浩), a senior economist at Commerzbank in Singapore, was quoted by Bloomberg News as saying.
China’s premier free trade zone in Shanghai was set up in 2013 with the promise of a range of financial reforms, but foreign investors especially have expressed disappointment over the pace of change.
Chinese are now only allowed to convert the equivalent of US$50,000 from the yuan currency under an annual quota, state media said, which creates a limit on overseas investment though many evade the barrier.
Individuals are allowed to legally invest in stocks in Hong Kong through a special link with accounts on the Shanghai Stock Exchange.
The central bank announcement, which gave no timetable for the move, followed a top-level Chinese Communist Party meeting which discussed the country’s development plans for the next five years.
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