China will unveil financial policies changes to support overseas
investment of domestic companies, Zhou Xiaochuan, governor of the People's Bank
of China (PBoC), said Saturday.
The central bank will scrap unnecessary controls on foreign
exchange reserves to fund local firms' outbound investment, Zhou
told a forum at the 11th China International Investment and Trade
Fair opened in Xiamen, a coastal city in southeastern Fujian Province.
"We will remove unnecessary restrictions on reviewing sources of
foreign exchange funds, as well as on foreign currency purchase and
profit remittance," he said.
"We will also allow domestic firms to use their own foreign
exchanges or buy foreign funds with local currency yuan to invest
abroad."
The governor noted the central bank will explore ways to buy
shares in foreign banks so as to provide more convenient financial
services for the overseas operations of domestic businesses.
"We encourage them to raise capital through various means
including bank loans, stock listings and bond sales," he said,
adding their domestic operations can provide warrants for the fund
raising once they get official go-ahead.
Zhou acknowledged that the PBoC has long been taking vigorous
efforts to cultivate and develop the foreign currency markets
during the past few years.
He added: "we will crank up efforts to develop more products on
the foreign currency markets to help companies evade risks brought
about by the changes in market exchanges rates and interest
rates."
"The central bank will also strengthen research on the business
and legal environments in global regions where it enjoys bilateral
tech cooperation agreements or funds with the regional bank
institutions."
China sees negative interest rates as the consumer inflation
climbs mainly due to food price hikes, prompting more people to
transfer their bank deposits to the red-hot stock markets for
higher earnings.
China's one-year benchmark deposit rate reached 3.60 percent
after a 0.27 percentage points rise starting from Aug. 22, the
fourth rise this year.
But the consumer price index, the main gauge of inflation, may
exceed the ten-year high of 5.6 percent in July, said Bi Jingquan,
vice head of the National Development and Reform Commission.
(Xinhua News Agency September 9, 2007)
