Central bank vows to push ahead with reform
(AFP)
Updated: 2005-11-18 21:20

China's once deeply conservative central bank will push ahead with reforms for its exchange rate system, and even promised it would listen to suggestions of how it can perform the task better.

"We will gradually bring about convertibility of the currency on the capital account," central bank governor Zhou Xiaochuan said in an essay published by Study Times, a newspaper run by the influential Central Party School.

Zhou did not give a specific timetable for the move, which would entail full convertibility for the Chinese currency.

This is in line with other government officials' comments on the topic ever since the late-1990s Asian financial crisis, which alerted Beijing to the perceived dangers of too-speedy reform.

The Chinese currency is freely convertible on the current account for trade in goods and services. The capital account, covering items such as money entering the country for investment in the stock market, remains closed.

"The central government will gradually and selectively liberalize controls on cross-border transactions and achieve full yuan convertibility under the capital account," Zhou said.

But even after the yuan becomes convertible under the capital account, the bank "will still impose certain limits on short-term foreign debt and speculative activity," Zhou said.

Zhou also said in his essay that China will continue to improve its "managed float system" for its currency.