China's central bank announced on Thursday the relaxation of
controls on foreign exchange accounts, simplifying approval
procedures for foreign exchange payments in the service trade, and
procedures for individuals to buy foreign currencies.
According to a document made public on Thursday by the State
Administration of Foreign Exchange (SAFE), the three policy
readjustments will be effective as of May 1.
They include the readjustments on foreign exchange accounts,
simplifying approval procedures for foreign exchange payments in
the service trade, and procedures for individuals to buy foreign
currencies.
Under the aforementioned readjustments, it will be easier for
corporations and individuals to open foreign exchange accounts.
The ceiling of foreign exchange retained by enterprises in a
Current Account will be raised based on their foreign exchange
income and expenditure.
The administration said every domestic resident can buy up to
US$20,000 worth of foreign exchange from State-owned banks each
year. Applications for additional amounts can be made to the banks
and must be accompanied by the relevant certificates that prove
their need for more foreign currency.
The bank said it will also allow qualified banks to pool capital
in renminbi, the Chinese currency, from domestic institutions and
individuals for overseas investment in products with fixed returns
under an unspecified quota system.
It will allow fund management firms and other securities
institutions to invest in a combination of stocks and other
overseas securities using foreign currencies gathered from domestic
institutions and private sources.
The bank said it would allow qualified insurance institutions to
buy foreign currencies for investment in overseas products with
fixed returns and money market instruments.
The amount of foreign currency purchased would be a "certain
portion" of the total assets of the insurance institution.
The bank said other new policies would be implemented in
cooperation with other departments, while closely monitoring
international payments, and readjusting policies when necessary to
prevent risks and safeguard the country's economic and financial
security.
The central bank said the new policies are designed to improve
the country's management of foreign exchange, boost trade
facilitation and further cultivate the forex market, and promote a
more even balance of international payments.
(Xinhua News Agency April 14, 2006)