China vows further forex, capital account reform
(AFP)
Updated: 2005-12-05 16:30

China has vowed to carry out further reforms to the yuan, reiterating it will loosen regulations on its tightly restricted capital account but without giving a concrete timetable.

In a question and answer question carried in the official China Securities Journal, the central bank said it would guide reasonable capital outflows and improve the management of capital inflows.

"The next step will be to deepen the flexibility of the yuan (in) the currency's exchange rate system, perfecting it based on market demand and supply, in accordance with (China's) economic development and reform needs," the People's Bank of China said in the newspaper.

"Meanwhile, at the same time ... (to) promote the capital account's convertibility allowing the reasonable outflow of capital and at the same time strengthening and pefecting the management of fund inflows."

China revalued the yuan in July by about 2.1 percent against the dollar and putting it into a basket of currencies.

The Chinese central bank also said in Monday's comments it did not believe the yuan revaluation would cause a sharp increase in imports or decrease China's advantage in the manufacturing sector.

Regulators would not restrict imports, the bank said, adding that any increase in imports would help reduce the nation's trade surplus.

In October, China's trade surplus hit a record 12.01 billion dollars.

Exports for January to October were up 31.1 percent at 614.49 billion dollars, while imports stood at 534.12 billion dollars, up 16.7 percent.