China Names Yuan Convertibility Plan as Goal This Year

China signaled it will propose plans this year to allow freer flows of its currency in and out of the nation as part of measures to loosen control over the yuan and interest rates.

The plan on yuan capital-account convertibility will also include a way to let individuals make overseas investments, the State Council said in a statement on 6 May after a meeting led by Premier Li Keqiang on the focus of economic reforms in 2013. Other measures include improving controls on risks from local-government debt, expanding trials of value-added taxes on companies and pushing forward changes to the country’s household-registration system.

Future changes may include raising or removing quotas on foreign investment in the nation’s bond and stock markets and giving Chinese companies more freedom to borrow overseas, said Chen Bingcai, a former official with the nation’s foreign-exchange regulator. Li in March pledged to open the economy to more market forces and strip power from the government as part of efforts to restructure growth.

China needs to sacrifice short-term economic growth for structural adjustments, central bank Governor Zhou Xiaochuan said last month after the nation reported slower-than-forecast first-quarter expansion.