China still faces serious problems posed by an imbalance in
international payments despite its efforts to reform the forex
management system in the first half of the year.
It remained a difficult task to achieve a satisfactory
international balance of payments, said Hu Xiaolian, director of
the State Administration of Foreign Exchange (SAFE), at a recent
symposium.
Last year the surplus in China's balance of international
payments was 223.8 billion U.S. dollars. In 2004 it was 110
billion. SAFE statistics show that China posted an increase of 76.3
percent in its contracted overseas direct investment funds in the
first half year.
China continued to support its businesses?in broadening
capital outflow channels, said Hu. The government had abolished the
purchase quota of foreign exchange in overseas direct investment to
encourage more outflow of capital. Hu attributed the surplus to the
rapid growth of the open economy but observed that it also
reflected problems in China's economy.
To reach a satisfactory balance of international payments would
require change to the mode of economic growth, adjustment of the
economic structure and increasing domestic demand, said Hu. That
would be a long and gradual process.
The official asked concerned departments to tighten supervision
over cross regional capital flows especially those in the short
term. The reform of the forex management system should be deepened
to allow conversion of the Renminbi in capital accounts.
(Xinhua News Agency August 11, 2006)