China needs to deepen reform of and further...>

CHINA: China needs to deepen reform of and further open its financial sector to

promote internationalization the yuan, China Banking Regulatory Commission chief

economist Ba Shusong wrote in a long article published Tuesday by the Financial

News, a newspaper supervised by the People's Bank of China. Restrictions on

securities investment and capital outflows should be reduced, he said, while a

new index measuring macro-economic fundamentals should be considered and

introduced into the pricing of the yuan central parity. He also proposed further

expanding the Chinese financial market's connections with overseas markets to

provide higher-quality risk pricing platforms and enhance the yuan's function as

an investment currency. New types of investment instruments should be introduced

for stock and bond transactions, and new commodity, stock and currency

derivatives and other risk management tools should be authorized. Ba stressed

the restrictions on foreign investment entering China's financial market need to

be reduced so that more foreign competition boosts the efficiency of Chinese

financial institutions.