RMB Capital Account Liberalization Is Not Too Risky

During the 2015 annual meeting of the Boao forum for Asia, the timing of the opening of the RMB capital account and other issues, Wu Xiaoling, vice president of the finance and Economic Commission of Wudaokou Tsinghua University and the vice chairman of the NPC Financial and Economic Commission, received an exclusive interview with the first financial daily.

To achieve the maturity of the convertibility of capital account, Wu Xiaoling said, in fact, from the 7 major categories and 40 sub capital items defined by the International Monetary Fund (IMF), in addition to 4 items, China has realized full or partial convertibility. One of the four most important points is to borrow foreign debts and a non resident to invest in China, including creditor's rights, stocks, derivatives, etc., as well as domestic residents to invest abroad, that is, the investment of financial assets.

Wu Xiaoling pointed out that at present, the domestic management of foreign debts basically takes the way of controlling each borrower's balance sheet, and has a certain degree of liberalization. Offshore Resident investment There are QFII (qualified foreign institutional investors) and RQFII (qualified foreign investors) in China. Domestic residents investing abroad also have QDII (qualified domestic institutional investors). The direct investment of domestic and overseas residents has been linked by Shanghai and Hong Kong.

"In addition, in 2005, residents had an annual amount of US $50 thousand for free purchase and payment of foreign exchange, and what was the concept of US $50 thousand, according to the exchange rate of RMB against the US dollar at around 8.2 yuan, that is to say, 400 thousand. RMB It can be bought and sold at any rate. For ordinary people, it is very convenient to use remittance. It can be said that we have had the amount of accumulation, let go, I think it is not a problem, do not have to worry about the immature conditions. Wu Xiaoling said.

The market has questioned. Capital account Once the convertibility is opened, there will be a big risk of capital coming and going. How can we prevent and control it?

Wu Xiaoling said, first of all, the current implementation of the free trade pilot area is to manage the accounts separately and monitor the free trade account (FTA). The State Administration of foreign exchange has also established an account monitoring system over the years. The risk of capital account liberalization mainly comes from the uncertainty of capital flow. If there is an account monitoring system, we can guard against the flow of capital.

Second, all convertibility is not totally unregulated. If there are some economic behaviors that are not allowed, then there will be some control over capital and investment. This is also possible; third, it is precisely because of the realization of convertibility that the fluctuation of RMB prices can reflect supply and demand more. When the price distortion is reduced, the risk of speculation will be reduced. Fourth, when the economy has great problems, it can also be temporarily controlled. So overall, there is not much risk.

Finally, Wu Xiaoling said: "the risk of convertibility under capital terms is the key to whether China's economy is at risk. Under the current international economic situation, although China's economic development is entering a new normal and developing at medium and high speed, we still look good globally, so there is no big problem."