PBOC urges financial sector opening to persist

CHINA’S central bank governor has called for continued efforts to expand the opening up of the country’s financial sector in a proactive and orderly manner.

While China has made some progress in the financial opening-up, there is still room for improvement to meet the need of the sector’s development, said Yi Gang, governor of the People’s Bank of China, in a book published to mark the 20th anniversary of Chinese Economists 50 Forum, an academic organization.

“Sectors that are more open tend to be more competitive, and less open sectors usually lag behind and accumulate more risks, as proved by the experience from China’s reform and opening-up,” Yi wrote in the book.

He urged further easing of curbs on foreign equity, forms of establishment, and qualification of foreign shareholders of financial institutions.

Law-making and policy-making should be more transparent to create a better environment for foreign-funded financial institutions, Yi noted.

The Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect programs should be improved, and the ShanghaiLondon stock connect program should be launched as early as possible, he said.

More efforts are needed to deepen reform of the yuan exchange rate formation mechanism, so that the market plays a more decisive role in the exchange rate and the yuan has more flexibility in fluctuation, Yi said.

He also urged more yuan convertibility in the capital account and better regulation over cross-border capital flows.