The Chinese government will loosen limits on individual
investment abroad this year, according to Li Dongrong, vice
director of the State Administration of Foreign Exchange
(SAFE).
The government would further broaden channels for investment
overseas, Li said at a meeting on the country's capital investment
plan for 2007, the Shanghai Security Journal reported on
Monday.
The report quoted analysts as saying the move indicated a major
breakthrough in allowing Chinese individuals to buy overseas
financial assets.
Currently, Chinese individuals can only buy investment products
provided by banks and fund management companies if they want to
invest abroad under a Qualified Domestic Institutional Investor
(QDII) scheme.
The SAFE granted 15 banks overseas investment quotas totaling
US$13.4 billion in 2006. Meanwhile, 15 insurance companies were
granted overseas investment quotas of US$5.17 billion and one fund
management company was given a quota of US$500 million.
The meeting also heard that the government would also increase
the number of QDIIs and the value of their investment quotas, but
no details of quotas were available.
China has also eased control on foreign exchange purchases by
individuals. The annual quota for individuals was raised from
US$20,000 to US$50,000 on Feb. 1 this year.
At the end of 2006, China recorded a 14-percent annual rise in
foreign debt, of which short-term foreign debt was up 16 percent or
so, figures from the SAFE showed.
Short-term foreign debt makes up as much as 57 percent of total
foreign debt, far higher than the international warning level of 25
percent.
The government is preparing to establish a state forex
investment company to improve management of China's huge foreign
exchange reserves and generate higher returns on the reserves under
the preconditions of security.
(Xinhua News Agency March 20, 2007)