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PR Newswire
27-04-2014, 09:50 AM
China eases currency controls for MNCs
Trial started in 2012 expanded to more firms, giving them leeway in capital management
Published on Apr 27, 2014 1:12 AM
Beijing - China will expand a trial programme to make it simpler for multinational companies (MNCs) to transfer funds within and outside the country, in a move that will further open its tightly controlled capital account.
The experiment, which began in 2012 in Beijing and Shanghai, came in response to growing demand from international companies operating in China for more freedom to use their growing amounts of yuan to boost the efficiency of their management of capital.
However, Chinese regulators have also been keen to keep any speculative pressures on the currency at bay.
The State Administration of Foreign Exchange (Safe), which manages China's US$3.3 trillion (S$4.2 trillion) foreign exchange reserves, is expanding the trial programme to any Chinese or foreign company with operations inside or outside the country with an annual forex income of over US$100 million, the regulator said in a statement on its website late last Friday.
One of the goals of the trial programme is to "explore and reproduce a mechanism for the capital account convertibility system", Safe said.
The new rule, which would take effect from June, will allow multinational companies to open overseas and domestic accounts simultaneously as well as conduct collection and settlement of accounts in foreign exchange.
It allows free transfer of overseas accounts within the company without quota caps, while domestic accounts will continue to have limits.
Firms say the freer flow of funds across China's borders would boost efficiency and cut costs.
China has pledged to allow market forces to play a greater role in the economy and its markets. It wants to expand the Chinese currency's footprint beyond Hong Kong, where more than 80 per cent of yuan trade settlement transactions are handled, and foster greater confidence among offshore businesses to adopt the yuan as a currency for trade.
At the same time, Beijing remains committed to protecting the Chinese economy from risks associated with capital flows which might be triggered by the end of the United States Federal Reserve's quantitative easing programme.
Safe announced on its website this month that it will introduce more rigorous inspections of the foreign exchange businesses of financial institutions during the course of the year. It added in its statement that it will be monitoring closely cross-border capital inflows and outflows.
Reuters
Trial started in 2012 expanded to more firms, giving them leeway in capital management
Published on Apr 27, 2014 1:12 AM
Beijing - China will expand a trial programme to make it simpler for multinational companies (MNCs) to transfer funds within and outside the country, in a move that will further open its tightly controlled capital account.
The experiment, which began in 2012 in Beijing and Shanghai, came in response to growing demand from international companies operating in China for more freedom to use their growing amounts of yuan to boost the efficiency of their management of capital.
However, Chinese regulators have also been keen to keep any speculative pressures on the currency at bay.
The State Administration of Foreign Exchange (Safe), which manages China's US$3.3 trillion (S$4.2 trillion) foreign exchange reserves, is expanding the trial programme to any Chinese or foreign company with operations inside or outside the country with an annual forex income of over US$100 million, the regulator said in a statement on its website late last Friday.
One of the goals of the trial programme is to "explore and reproduce a mechanism for the capital account convertibility system", Safe said.
The new rule, which would take effect from June, will allow multinational companies to open overseas and domestic accounts simultaneously as well as conduct collection and settlement of accounts in foreign exchange.
It allows free transfer of overseas accounts within the company without quota caps, while domestic accounts will continue to have limits.
Firms say the freer flow of funds across China's borders would boost efficiency and cut costs.
China has pledged to allow market forces to play a greater role in the economy and its markets. It wants to expand the Chinese currency's footprint beyond Hong Kong, where more than 80 per cent of yuan trade settlement transactions are handled, and foster greater confidence among offshore businesses to adopt the yuan as a currency for trade.
At the same time, Beijing remains committed to protecting the Chinese economy from risks associated with capital flows which might be triggered by the end of the United States Federal Reserve's quantitative easing programme.
Safe announced on its website this month that it will introduce more rigorous inspections of the foreign exchange businesses of financial institutions during the course of the year. It added in its statement that it will be monitoring closely cross-border capital inflows and outflows.
Reuters