(Yicai Global) March 3 -- China will gradually lift foreign exchange restrictions in the micro fields while strengthening authenticity and compliance checks on banks' foreign currency businesses.
Fang Shangpu, deputy director of the State Administration of Foreign Exchange, made the remarks in an article published on Chinaforex.com yesterday.
Future work on foreign exchange administration will focus on four aspects, Fang said. One is to improve the management system of cross-border capital flows in the micro fields. China will formulate a negative list based on the principle of prudence, and gradually remove foreign exchange restrictions in the micro fields while strengthening authenticity and compliance checks on banks' forex businesses. The PRC will also ramp up its crackdown on illegal and irregular acts to safeguard forex market discipline and build a management framework featuring both government regulation and market discipline to fully exploit the role of banks as a bridge between forex regulators and market entities, effectively communicate policy and strictly rein in speculation and arbitrage that circumvent the country's policy restrictions.
In terms of cross-border capital, a macro-prudential management system of cross-border capital flows should be established, Fang said. Efforts should go to improving policy tools to conduct counter-cyclical regulation of cross-border capital flows and to construct buffers against prudence-related risks in the forex field.
China should establish and improve an open and competitive onshore forex market, he noted. China should also let yuan exchange rate ply a more fundamental function in allocating foreign exchange resources, regulation of cross-border capital flows and its balance of payments as well as diversify transaction instruments and increase transaction entities.
Lastly, efforts should go to improving the statistical and monitoring system of cross-border capital flows and constructing a Big Data platform for forex management, he added.