China will quicken its steps to relax controls on foreign exchange
(forex) to finally realize full convertibility of its currency,
renminbi, while at the same time improving its regulatory
administration.
Shanghai, the country's financial hub, will play a leading role in
the process, according to Hu Pingxi, director of the State
Administration of Foreign Exchange (SAFE)'s Shanghai branch.
After lowering the bars for local enterprises to set up settlement
accounts for foreign exchange, the city will take the lead in
allowing all enterprises to open such accounts.
Fang Shangpu, deputy director of the branch, said the measure will
greatly facilitate the service sector's business in foreign
currency.
Since May 8, SAFE's Shanghai branch has allowed all 15 authorized
domestic banks to approve forex current accounts for their
corporate clients, a right that used to be reserved solely for
SAFE.
"We are looking at authorizing foreign banks and financial
companies to conduct forex business," Fang said.
Similar reforms in the capital account are also in the pipeline, he
said, but didn't give any time frame.
Verification and cancellation of forex receipts on export will be
further simplified.
Prior to this, not all domestic enterprises were allowed to open
settlement accounts for foreign exchange in order to give the
government better control over the flow of foreign currency, while
all foreign companies were free to do so.
Another great leap forward will be allowing more banks to approve
the repayment of forex loans made to their clients.
China has pledged to improve the timeliness of reporting foreign
exchange receipts in international payments. The period for
reporting has been reduced from 20 to 10 working days. And in 2003
the period will be further shortened from 10 to five working
days.
To
achieve the goal, SAFE and various banks are working together to
explore ways of speeding up and simplifying the reporting
procedures with the aid of advanced technology, such as online
reporting.
Fang said as China has joined the World Trade Organization, it's
high time to revise forex management to keep it in line with
international practices to give enterprises more leeway in handling
their forex, and to help improve the investment environment for
foreign companies, and promote foreign trade.
"These new measures will also enable the authorities to monitor the
flow of foreign capital more efficiently," he added.
As
for the administration of forex in the insurance and securities
sectors, Fang said SAFE is working closely with the China Insurance
and Securities Regulatory Commissions to phase in related
policies.
(China
Daily June 22, 2002)