China supports opening financial markets for better forex flows, central bank deputy says
Scrutiny of foreign companies transferring profits out was ‘not excessive’, says PBOC Deputy Governor Pan Gongsheng
China’s policymakers support opening financial markets for capital and investment to flow both in and out of the country, according to central bank Deputy Governor Pan Gongsheng.
China would push ahead on oversight and enforce existing regulations on foreign exchange, Pan said in an interview on Sunday with Bloomberg and Caixin Magazine. Scrutiny of foreign companies transferring profits out was “not excessive”, he added. A healthy foreign-exchange market helped all participants, said Pan, who also heads the State Administration of Foreign Exchange, which executes currency policy.
With US tightening looming and the People’s Bank of China interest rate at a record low, Beijing’s capital outflow pressures are poised to intensify this year. The central bank has stepped up scrutiny of requests to move money out of the country since last year, and it’s also speeding reforms to open up the domestic bond market to lure more foreign investors.
“China has always had these reviews, and those meeting requirements can transfer money freely,” Pan said. “Companies can lodge a complaint with the foreign-exchange authority if they have any problems.”
Funds in yuan aren’t fully convertible to other currencies under current capital account rules. Companies must provide supporting documentation including tax records and audit reports when they plan to transfer profit out of the country.
