China's once deeply conservative central bank said yesterday it would push ahead with reform of its exchange-rate system, and even promised it would listen to suggestions of how it can perform the task better.
"We will gradually bring about convertibility of the currency on the capital account," central bank governor Zhou Xiaochuan (
Zhou did not give a specific timetable for the move, which would entail full convertibility for the Chinese currency.
This is in line with other government officials' comments on the topic ever since the Asian financial crisis of the late 1990s, which alerted Beijing to the perceived dangers of too-speedy reform.
The Chinese currency is freely convertible on the current account for trade in goods and services. The capital account, covering items such as money entering the country for investment in the stock market, remains closed.
"The central government will gradually and selectively liberalize controls on cross-border transactions and achieve full yuan convertibility under the capital account," Zhou said.
But even after the yuan becomes convertible under the capital account, the bank "will still impose certain limits on short-term foreign debt and speculative activity," Zhou said.
Zhou also said in his essay that China will continue to improve its "managed float system" for its currency.
The central bank pushed through a 2.1 percent revaluation of the yuan on July 21 despite opposition from within the government, in particular the Ministry of Commerce, warning a stronger currency would hit Chinese exporters.
Seeking to carry on reform in the face of the demands of multiple interest groups, the central bank also said yesterday it is willing to listen to positive suggestions about its exchange rate mechanism.
A series of measures have also been announced following the revaluation, including allowing new derivative products and adding more players in the country's foreign exchange market.
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