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Forex rules may relax

(Shanghai Daily)
Updated: 2007-04-17 14:35

Chinese individuals may be allowed to make direct purchases of foreign stocks, funds and bonds as the country adopts a new strategy in foreign exchange management, the China Securities Journal reported yesterday.

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Ba Shusong, vice director of the Finance Institute of the Development Research Center under the State Council, told the journal that for decades China has encouraged companies to export to earn foreign exchange but provided far fewer incentives for imports.

"The government is now taking a more balanced approach," Ba said. "In the absence of suitable overseas investment channels, few Chinese are willing to hold foreign currency."

China saw its foreign exchange reserves hit US$1.2 trillion at the end of March, up 37 percent year-on-year, with the increase in March more than doubling to nearly US$45 billion.

The government began to allow local residents to purchase overseas investment products through banks, insurance and fund management companies last year and expanded the annual cap on foreign exchange purchases by individuals from US$20,000 to US$50,000.