China to deepen high-quality capital account opening

China will deepen high-quality capital account opening and improve the diversified investment and use of the country's foreign exchange reserves in the next five years, as part of broader efforts to sharpen its financial strength, a senior official said.

In an article published by Qizhi?magazine, Zhu Hexin, head of the State Administration of Foreign Exchange, has shed light on key priorities for foreign exchange reform and opening-up in the 15th Five-Year Plan (2026-30) period as the country is entering a "crucial phase of upgrading" in its drive to become a financial powerhouse.

"We will continue to make efforts in key tasks such as deepening facilitation-oriented reforms, promoting capital account opening, and strengthening monitoring of cross-border fund flows, as part of the stepped-up efforts to build the country into a financial powerhouse," Zhu, who is also deputy governor of the People's Bank of China, the country's central bank, said.

Zhu said that efforts will be made to coordinate the advancement of renminbi internationalization with high-quality opening of the capital account — which tracks cross-border capital flows — as the country steadily pushes forward institutional opening-up in the foreign exchange sector.

Reforms will focus on key areas, including direct investment, cross-border financing and securities investment, with the aim of expanding an autonomous opening-up framework, Zhu said, noting the importance of optimizing foreign exchange management policies for high-level opening platforms such as pilot free trade zones and free trade ports.

Adopted at the fourth plenary session of the 20th Central Committee of the Communist Party of China, the recommendations for formulating the 15th Five-Year Plan have called for advancing the Chinese currency's internationalization, pursuing greater openness of the capital account, and building a homegrown, risk-controllable cross-border renminbi payment system.

Guan Tao, global chief economist at BOCI China, said that capital account opening and renminbi internationalization have increasingly become "two sides of the same coin", making the steady improvement of capital account convertibility a key task during the 15th Five-Year Plan period.

"Future steps are likely to remain prudent and gradual," Guan said, noting that premature liberalization without sufficient domestic reforms could amplify asset price volatility and market distortions.

He added that policy priorities could include streamlining existing cross-border securities investment channels into a more unified framework, strengthening the use of taxation tools to better manage capital flows, and encouraging more overseas institutions to issue bonds and equities in China's onshore market.

Meanwhile, Zhu said that China will refine foreign exchange reserve management to ensure asset safety, liquidity and value preservation and appreciation.

The country will leverage equity investment platforms such as the Silk Road Fund and Siyuan Investment Co Ltd to support both major flagship projects and "small yet impactful" people-centered initiatives, serving high-quality Belt and Road cooperation, Zhu said.

Liu Chunsheng, an associate professor of international economics at the Central University of Finance and Economics, said China's more active use of reserves through market-oriented equity investment platforms can help balance commercial sustainability with strategic objectives.

This would also provide stable, long-term capital for other emerging economies, thus promoting more diversified global capital flows and contributing to a more multipolar international monetary system, Liu said.

China's foreign exchange reserves reached a new decade-high of $3.3579 trillion as of the end of 2025, while the country's official gold reserves have risen for the 14th straight month to 74.15 million ounces, official data showed.

Zhu added that SAFE will focus on further facilitating cross-border trade, financing and investment to support the real economy, improving a foreign exchange policy framework that grants greater convenience to compliant and credible market participants.

The dual framework of macroprudential management and micro-level supervision will also be enhanced to ensure foreign exchange market stability, Zhu said, along with an enriched policy toolkit, stronger monitoring and early warning for capital flows, and efforts to keep the renminbi exchange rate basically stable at a reasonable and balanced level.