(Yicai Global) July 20 -- China’s central bank will continue to support Shanghai in building an international financial center through a series of measures, including free capital inflows, outflows and exchanges in the Lingang New Area of the city’s free trade zone, an official said today.

Shanghai’s most important aspect as a global financial hub is reliance on Chinese yuan-based assets, Wang Xin, research bureau director-general at the People’s Bank of China, said in response to a question from Yicai Global at a cabinet press briefing held to explain policies on Shanghai’s Pudong New Area.

China issued guidelines to support high-level reform and opening-up of Pudong New Area on July 14. The area will expand openness from the factor level to the system level and take the lead in establishing a new system for an open economy that is compatible with prevailing international rules.

Gradually increasing global demand for yuan-denominated assets will fuel the need for related risk management, a legal environment and talent supply, further promoting Shanghai as a center of yuan asset allocation, risk management and fintech, Wang said.

The International Monetary Fund added the yuan to its Special Drawing Rights basket of currencies in October 2016, meaning it was already seen as a currency that could be freely used worldwide. But China still has foreign exchange controls in place, with an annual currency exchange limit of USD50,000 for each citizen.

China has promoted the opening-up of its financial sector in recent years, with its bonds and stocks included in several leading global indexes, Wang said, adding that the willingness of foreign investors to own yuan assets and the value of those assets are both on the rise.

The PBOC is also expanding cross-border investment and financing channels, improving relevant institutional arrangements, and continuously offering convenience for overseas investment to reach the Chinese market, he added.

In May last year, the PBOC formally abolished the quota system for overseas institutional investors, who had earlier faced an upper limit of USD300 billion for investment in the Chinese mainland.

Editor: Peter Thomas