China should speed up yuan reforms: central bank

BEIJING should move faster to loosen currency controls to make it easier for Chinese companies to invest overseas and boost the yuan's global status, state media said yesterday citing a central bank study.

Beijing has been gradually easing its grip on its currency as it moves towards full convertibility, but the central bank said the time was ripe for the country to open up its capital account, the China Daily said.

"Now is the time to do so because low valuations in overseas markets offer a rare investment opportunity for Chinese companies," the central bank's top researcher Sheng Songcheng said in the study.

"If we wait until conditions all mature for interest rate liberalisation, currency liberalisation and yuan internationalisation, we might never find an appropriate time to open up the capital account."

China restricts the movement of money outside the country, such as investment in real estate, stocks and bonds, to prevent sudden inflows and outflows of capital that could destabilise its financial system.

Beijing has vowed to increase the use of the yuan in international trade and encourage foreign investment in Shanghai's financial markets, according to a five-year blueprint unveiled this year by the National Development and Reform Commission, a powerful state planner.

But the central bank study said currency reforms were taking too long and China could loosen investment controls and encourage more enterprises to take opportunities abroad in the next three years.

AFP