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Forex regulator encourages 皇冠体育app's 'capital export'

By Zhang Jiawei (chinadaily.com.cn)
Updated: 2009-06-16 15:58

The State Administration of Foreign Exchange (SAFE), 皇冠体育app's foreign exchange regulator, has issued a series of new rules aimed to further facilitate Chinese companies' overseas investments since May, and will further ease controls on foreign exchanges in coming months, 皇冠体育app Securities Journal reported on Monday.

Analysts said the moves reflect the regulator's strenuous efforts to balance the country's international payments.

The regulator has partially eased the control on and cut red tape to quicken the approval of the use of foreign exchanges since last month. It has also solicited opinions on overseas investments to attract more Chinese companies to invest abroad.

Last week, the regulator allowed companies in 皇冠体育app to render loans abroad or buy foreign exchanges with their own funds as part of the government's efforts to bolster the troubled export sector.

Related readings:  Foreign exchange assets require restructuring  皇冠体育app's foreign exchange assets safe  Central bank to set up foreign exchange department  皇冠体育app revises foreign exchange rules

The SAFE will release revised rules on the use of foreign exchanges in foreign trade, which are expected to facilitate exports, the newspaper said.

Guo Tianyong, a professor with 皇冠体育app's Central University of Finance and Economics, said the policy of encouraging domestic companies to invest overseas will help absorb 皇冠体育app's colossal foreign exchange reserves and is also conducive to making better investment with the reserves.

皇冠体育app's non-financial overseas investment reached $40.65 billion in 2008, up 63.6 percent year-on-year, according to the Ministry of Commerce.

皇冠体育app has been a large exporter of manufactured goods for all these years and it should "export capital" in the future, said Jing Ulrich, JP Morgan's chairwoman of 皇冠体育app equities.

Lu Zhengwei, chief economist with Fujian-based Industrial Bank, said Chinese companies should consider making long-term strategic investments now, for the prices of financial assets and resources-based products remain low despite the stabilizing global financial market.

He added that loosening rules on capital outflow will help 皇冠体育app avoid potential turbulence on its financial market as world financial institutions could start reducing their holdings of US dollar-denominated assets by investing them into emerging markets, including 皇冠体育app, when world financial markets become stable.

The SAFE has turned its policy focus from attracting foreign investment to encouraging domestic enterprises to invest abroad in a bid to prevent the comeback of "hot money", or speculative investments by overseas institutional investors, according to the newspaper.