Exchange rate needs to be kept stable, Li says
Premier: Prudent currency policy crucial for overall vitality of macroeconomy
China will better facilitate crossborder trade and investment with new measures including improving foreign exchange management and further streamlining regulatory requirements, with a view to attract foreign investors with a more enabling business environment.
The decision was adopted on Wednesday at the State Council’s executive meeting, chaired by Premier Li Keqiang.
Twelve measures to boost crossborder trade and investment were adopted. The pilot reform of foreign exchange receipts and payment facilitation will be expanded. Procedures of receipts and payments will be simplified for micro and small cross-border e-commerce companies. Project contractors will be allowed to put their overseas funds under unified management.
Foreign companies engaged in non-investment business will be allowed to make equity investments on the Chinese mainland. The pilot program that facilitates revenue payments under capital accounts will be expanded. Limits on the number of foreign currency accounts under capital accounts will be removed. Foreign exchange settlements under certain capital accounts will be facilitated.
“Given the increasing complexity of global financial markets, it is important to guard against risks in cross-border capital flows. The general principle is to maintain a macroprudential policy while enhancing micro regulation,” Li said.
According to the State Administration of Foreign Exchange, China’s foreign exchange reserves stood at $3.09 trillion at the end of September, up 0.6 percent from the beginning of the year.
“The yuan exchange rate needs to be kept basically stable at an equilibrium and adaptive level, and foreign exchange reserves at a reasonable level. This is crucial for the overall stability of the macroeconomy. It is also a principle that we’ve long followed,” Li said.
Measures to keep foreign trade stable were adopted at the meeting. Policies on export tax rebates and credit-based insurance will be further improved. More efforts will be made to develop a network of high-standard free-trade areas, foster new forms of industry in foreign trade and set up another group of comprehensive pilot zones for crossborder e-commerce.
Imports including agricultural products, daily consumer goods and some industrial equipment and parts will be increased to meet domestic demand.
“China has a vast domestic market, yet it is also deeply integrated into the global economy. There is much pressure on foreign trade. What is important now is that the many policies that have been introduced will be fully delivered in an effort to achieve the goal we set early this year of ensuring the steady growth and improved quality of foreign trade,” Li said.