The Central Bank Reported Capital Account Opening &Nbsp; The First Clear Timetable.

Capital controls may constrain capital flows in the short term, but can not fundamentally change the capital flow caused by economic imbalances.

The research group of the people's Bank of China Investigation and Statistics Division pointed out in a report issued recently.

Capital control

Recently, the Xinhua news agency and the two authoritative media reports of the people's daily made the report which was not posted on the central bank's official website more weighted.

Capital control efficiency decline

In fact, capital account control, while isolating international economic and financial risks, also makes it difficult for large domestic stocks of private capital to find suitable investment channels, and a large number of funds gather in domestic circulation links, resulting in bubbles in individual industries and distortions in RMB pricing. Therefore, the call for liberalization of overseas investment in domestic capital has always existed.

In recent years, the government decision-makers have also considered this, and gradually liberalized the restrictions on foreign investment under capital account.

In 2011, the safe export policy of export earnings to the whole country was launched to carry out the reform of import and export verification.

The quota for foreign exchange purchase is cancelled and the initial cost of overseas investment is allowed to be remitted.

The non official channels are still active. The central bank report points out that the main reason for part of the fund's bypassing control outflows is the increase in the number of evading financial instruments, such as the price pfer of trade goods and services, the establishment of foreign companies, the exchange of domestic and foreign currencies, the global third party payment network, and the innovation of financial instruments such as buying and selling domestic assets overseas.

As well as "lagging balance of payments statistics and insufficient statistical power, it is difficult to conduct comprehensive statistics on individual cross-border financial asset pactions."

The central bank reports that the effectiveness of capital controls has been declining, and that the expansion of openness may be the ultimate choice.

In a report on this report, the Financial Times quoted Liu Ligang, an economist at ANZ, as saying: "RMB internationalization is now a clear task, so the boycott of capital account has been weakening recently."

The opening steps are still controversial.

Under the current capital account liberalization, the Chinese government prohibits foreign residents or institutions from investing in China's capital market in principle, and prohibits Chinese residents or institutions from investing in foreign capital markets. Among them, the scale management of QFII and QDII belongs to quantitative control.

The total amount of annual foreign exchange purchased by individuals is 50 thousand US dollars, and annual total management is also applied to the settlement of foreign exchange by individuals and individuals abroad.

The central bank report holds that the order and duration of capital account liberalization are relative. The basic principle should be mature and open.

Short term arrangement (1 years ~3), relaxing direct investment control with genuine trading background, encouraging enterprises to "go out"; medium-term arrangement (3 ~5 years), relaxing commercial credit control with real trade background, boosting RMB internationalization; long-term arrangement (5 ~10 years), strengthening financial market construction, opening up and opening up after inflow, opening up real estate, stock and bond pactions in a prudent way, and gradually replacing price control with quantitative control.

However, there are still controversies about the steps of opening up capital account.

"Domestic reform is the top priority, and then capital accounts can be opened," Zhang Bin, a researcher at the Institute of world economics and politics of the Chinese Academy of Social Sciences, told the daily economic news. The renminbi convertibility is the main direction of capital account liberalization. There is no disagreement, but there is still controversy about the timetable for reform.

After the central bank's report was released, Xia Bin, member of the central bank's Monetary Policy Committee (micro-blog) also pointed out in a public speech that we must adhere to the opening of the financial sector to the outside world and give priority to opening up to the outside world.

The distorted economic relations can be rectified and a sound financial system framework conducive to the development of the real economy will be established.

Only when an internal market has been fully marketed can it be opened to the outside world.

"The reform of exchange rate formation mechanism, the marketization of interest rates, the deepening of the bond market, and the integration of domestic financial supervision system with the international market must be addressed first. Otherwise, capital account liberalization will bring more arbitrage capital flows."

Zhang Bin pointed out.

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