When attending the China Development Forum 20 15 hosted by the State Council, China on March 22nd, Zhou Xiaochuan pointed out that 20 15 is the last year of China's Twelfth Five-Year Plan for National Economic and Social Development, and will strive to achieve the goal of capital account convertibility. In addition, he also said that China's capital market will be more open, including bond and stock issuers will have greater freedom.
The balance of payments includes current account (current account) and capital account (capital account). Current account refers to the frequent trade and labor payments between China and foreign countries, while capital account refers to domestic and foreign capital markets, including investment and financial transactions. At present, China has liberalized its current account. The capital account is freely convertible, which means that RMB is freely convertible. This will boost the internationalization of RMB, and will also have an important impact on China and even the global financial market.
Zhou Xiaochuan told Lagarde, chairman of the International Monetary Fund (IMF) who attended the forum, that RMB capital account convertibility is being promoted in three aspects:
First of all, it is more convenient to promote personal investment at home and abroad. At present, domestic residents in China invest in securities or other financial products abroad, and the prior approval system is implemented. Now we are ready to reform this. At present, overseas residents mainly invest in China financial market products through QDII (qualified domestic institutional investor) and QFII (Qualified Foreign Institutional Investor), which is not convenient and flexible. This year, other opening-up policies and pilot measures will be introduced one after another.
Second, the capital market will be more open. In the future, issuers of bonds and stocks will have greater freedom. They can choose foreign investors to issue in China or domestic investors to issue abroad. The currency they choose is convertible currency or RMB.
Finally, amend the foreign exchange management regulations. China's foreign exchange regulations have been revised many times, mainly because China is becoming more and more open. In the process of revision, the central bank also considered the requirement of realizing capital account convertibility and making RMB a freely usable currency. According to such a framework, foreign exchange control regulations have been reviewed and revised.
On February 12 this year, the People's Bank of China announced the launch of the financial reform in Shanghai Free Trade Zone, including taking the lead in establishing the path and management mode of capital account convertibility in Shanghai.