BEIJING, April 26 (Reuters) - China will expand a trial programme to make it simpler for multi-national firms to transfer funds within and outside the country, in a move that will further open its tightly controlled capital account.
The experiment, which began in 2012 in Beijing and Shanghai, came in response to growing demand from international companies operating in China for more freedom to use their growing amounts of yuan to boost the efficiency of their management of capital.
However, Chinese regulators have also been keen to keep any speculative pressures on the currency at bay.
The State Administration of Foreign Exchange (SAFE), which manages the country’s $3.3 trillion foreign exchange reserves, is expanding the trial programme to any Chinese or foreign company with operations inside or outside China with an annual forex income of over $100 million, the regulator said in a statement on its website late on Friday.
One of the goals of the trial programme is to “explore and reproduce a mechanism for the capital account convertability system”, SAFE said.
The new rule, which would take effect from June, will allow multi-national companies to open overseas and domestic accounts simultaneously as well as conduct collection and settlement of accounts in foreign exchange.
It allows free transfer of overseas accounts within the company without quota caps, while domestic accounts will continue to have limits.
Firms say the freer flow of funds across China’s borders would boost efficiency and cut costs.
China has pledged to allow market forces to play a greater role in the economy and its markets.
Beijing wants to expand the Chinese currency’s footprint beyond Hong Kong, where more than 80 percent of yuan trade settlement transactions are handled, and foster greater confidence among offshore businesses to adopt the yuan as a currency for trade. (Reporting by Sui-Lee Wee; Editing by Kim Coghill)