Financial News:

General Secretary Xi Jinping has made it clear once and again that China's door will never be closed. It will only open still wider. Over the past decade, what have we done to deepen reform and opening-up in the foreign exchange sector? What progress has been made in promoting the facilitation of cross-border trade, investment, and financing? Thank you.

Wang Chunying:

Thank you for your questions. Since the 18th CPC National Congress, with a commitment to the general principle of pursuing progress while ensuring stability, the SAFE has kept deepening reform and opening-up in the foreign exchange sector and strived to enhance the level of cross-border trade, investment and financing facilitation to serve the high-quality development of the real economy. To answer your questions, I would like to give an introduction through the following three aspects:

First, we have made steady progress in promoting high-standard opening up of capital accounts. On the one hand, we coordinated trading and exchanging and further opened up non-convertible items under the capital account in an orderly way while facilitating those already convertible items. After basically realizing the convertibility of direct investments, we promoted the connectivity of cross-border securities markets with a focus on the financial market opening up and improved qualified institutional investor programs which are familiar to us, such as QFII, RQFII, and QDII. In addition, we worked together with relevant departments to launch the Shanghai-Hong Kong Stock Connect, the Shenzhen-Hong Kong Stock Connect, and the Mainland-Hong Kong Mutual Recognition of Funds to open up China's bond market in an orderly manner. As a result, Chinese government bonds have been included in the three major global indexes. Also, we established a management system of cross-border financing within the framework of macro-management, enriched financing channels of market entities, and lowered financing costs. On the other hand, we actively served regional openness and innovation, promoted Shanghai as an international financial center based on RMB financial assets, supported the development of the Hainan Free Trade Port and Guangdong-Hong Kong-Macao Greater Bay Area, and supported pilot free trade zones and other leading opening-up areas in piloting foreign exchange management innovation. We also carried out trials of high-standard opening up of cross-border trade and investment to explore safer and more open institutions and mechanisms for managing foreign exchanges. 

Second, we have continued promoting the reform to facilitate cross-border trade, investment, and financing. I would like to introduce the following aspects: The first is to uphold the principle of current account convertibility. We continued deepening the reform of trade and foreign exchange management, shortening the average time for certain services by over 75% and cutting human costs by more than one-third. Competitive trade firms could get immediate foreign exchange settlement soon after application. The second is to actively serve the healthy development of cross-border e-commerce and other new trade types. We encouraged financial institutions to provide entities of new business types with secure, efficient, and low-cost service of cross-border currency settlement. In 2021, 1.9 billion settlements were completed. The third is to take several measures to facilitate the use for foreign exchange capital, such as those facilitating payments by capital account revenue and trials to facilitate cross-border financing.

Third, we have deepened innovative development in the foreign exchange market. The first is to enrich market participating entities. China's foreign exchange market now sees 773 participating institutions, including 136 foreign institutions. The second is to launch more trading products to form a relatively mature international system for forex products. I just said in my opening speech that more than 40 currencies are tradable in our foreign exchange market. The third is to support enterprises to improve exchange rate risk management. During the first five months of this year, the hedge ratio for foreign exchange enterprises doubled that of 2012. 

Next, we will unswervingly promote reform and opening-up in the foreign exchange sector and further facilitate cross-border trade, investment, and financing to better serve the new development paradigm with domestic circulation as the mainstay and domestic and international circulations reinforcing each other. Thank you.

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