Reforms must continue, says Li

Premier says China will not retreat from opening its economy further

China's financial system is under control and reforms will not stop despite temporary market turbulence, Premier Li Keqiang said in a recent high-level meeting.

Li says the China (Shanghai) Pilot Free Trade Zone, which was set up in 2013 as a showpiece of the country's reforms, will continue to be a testing ground for reform initiatives before they are introduced to the rest of the country.

Li sought to boost confidence after government intervention in the market gave rise to doubts about market-oriented reforms, experts say.

The State Council decided in an executive meeting to consider a trial in the free trade zone to allow qualified individuals to invest overseas, which moves things a step closer to scrapping controls on the capital account in the Chinese mainland.

"The start of the trial is a demonstration of the government's support of financial reforms, although such reforms have to be carried out in a gradual manner," Li said at the meeting.

Experts say if the measure is fully implemented across the country, it would significantly loosen capital controls in China. Chinese residents are now allowed to exchange only up to $50,000 (45,300 euros) each year.

"It will be a breakthrough to force other reform measures in the financial sector to follow," Li said at the meeting.

"The direction of financial reforms in China will not be changed, nor will we stop making efforts."

He urged a review system to filter qualified individual investors to engage in overseas investment.

Li said the expertise accrued in the Shanghai free trade zone over its two years will be of great use in other parts of the country.

The decision to gradually loosen the capital accounts was made following a financial symposium at which Li also reiterated his stance on financial reforms.

At a meeting with leaders of financial institutions in October, he said if there are doubts about whether financial reforms would stop after the unusual turbulence in the stock market, the answer is no.

China's stock market tumbled about 40 percent this summer, prompting the government to step in with multiple intervention measures. Many observers cited these measures as a blow to market-oriented financial reforms.

The country issued yuan-dominated sovereign bonds in London in October, the first issuance of the notes outside China, as the country is seeking a greater role for its currency in global trade and finance.

zhaoyinan@chinadaily.com.cn

(China Daily European Weekly 10/30/2015 page2)