UPDATE 1-China cabinet urges detailed yuan convertibility plan
BEIJING May 6 (Reuters) - China's cabinet has called for the drafting of detailed plans to help achieve full convertibility of the yuan, raising the prospect of accelerating reforms to free up the currency eventually.
"We should have operational plans on achieving the convertibility of the renminbi (yuan) under the capital account," state radio quoted Premier Li Keqiang as telling a regular meeting of the State Council, or the cabinet.
No details on yuan convertibility were given in a summary of the meeting published on the central government's website, www.gov.cn.
While the Chinese currency is already convertible under the current account - the broadest measure of trade in goods and services - the capital account, which covers portfolio investment and borrowing, is still closely managed by Beijing as it worries about abrupt capital flows.
Chinese officials have not given a timetable on a freely trade yuan, although the central bank has outlined the task of making the yuan "basically convertible" by 2015.
Beijing may have to loosen its grip on the yuan to support its long-term ambition to increase the global clout of its currency to rival the U.S. dollar and euro, analysts say.
Li also said that the government will steadily roll out market-based measures to reform the country's interest rate and exchange rate regimes.
"To stabilise growth and control inflation, risks and upgrade the economy, we must urgently deepen reforms and unveil concrete measures," Li said.
Annual economic growth unexpectedly slowed to 7.7 percent in the first quarter from 7.9 percent in the previous three months.
The government will push forward fiscal reforms while taking steps to rein in local government debt, Li was quoted as saying.
"We should improve the risk control measures on local government debt," he as saying.
China will set up regulations on overseas investment for individual investors while regulating the development of bonds, equity and trust markets, the cabinet said.
The country also plans reforms to railway investment and financing systems, including allowing private investors to enter parts of the state-dominated sector.