China will unveil financial policy changes to support overseas investment
of domestic companies, Zhou Xiaochuan, governor of the People's Bank of China
(PBoC), said yesterday.
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 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 fundraising 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 exchange rates and interest rates."
"The central bank will also strengthen research on 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.