MNI POLICY: China to Further Forex Liberalization: Official

     BEIJING (MNI) - China will further liberalize its forex market, encourage

regional trials of forex management reform to increase forex market participants

and forex products, but a precondition is risk prevention, said Lu Lei, deputy

administrator of State Administration of Foreign Exchange.

     Here are the key takeaways of Lu's speech made at the Bund Summit hosted by

China Finance 40 Forum on Sunday in Shanghai:

     - The "strategic trend" of forex management reform is to improve higher

level opening up as long as risks are prevented. 

     - SAFE will allow capable Chinese companies to invest overseas at a "real

and legal pace" and support One Belt One Road projects. The regional opening-up

as a free trade zone can benefits from forex management reform trials. 

     - China will orderly push forward capital account convertibility, increase

moderately the participants of its forex market and enrich forex trading

products to bolster its science and technology innovation board by attracting

overseas investors. 

     - SAFE will continue to conduct counter-cyclical measures to smooth

volatilities in the forex market and prevent large-scale unstable cross-border

capital flow that triggers systemic risks. 

     - China plans to enforce the facilitation of the forex income payment in

capital account and normalize the Qualified Domestic Limited Partner measure in

Shanghai. 

     - China is mulling RMB interest rate options to enrich the forex

derivatives and build up a competitive forex market 

     - SAFE is studying the application scenarios of blockchain and artificial

intelligence in cross-border finance and macro prudential management. Digital

finance's risk to monetary policy and financial stability should be carefully

prevented as its development outlook isn't clear. 

--MNI Beijing Bureau; +86 (10) 8532 5998; email: marissa.wang@marketnews.com

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