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China to set annual quota for foreign-exchange settlement by individuals

China to set annual quota for foreign-exchange settlement by individuals

China will make it easier for individuals to make foreign-exchange transactions next year, setting a yearly quota instead of limits for each transaction, the central bank said Friday.
The move is part of the bank's efforts to streamline the foreign-exchange process, and comes as Beijing's trading partners urge it to ease strict currency controls. In May, state media announced that China would abandon quotas on how much foreign currency its companies can obtain in order to invest abroad.
The People's Bank of China said on its Web site that from Feb. 1, individuals will be able to settle foreign exchange at banks throughout the year as long as they stay within an annual quota.
The central bank did not specify the annual quota for foreign exchange settlements, but said, "We will adjust the yearly quota at a suitable time and in the appropriate magnitude," based on factors such as the balance of payments situation.
The government announced earlier in the year that it would sharply raise the amount of money that companies and individuals are allowed to move abroad for investment as of May 1.
China has the world's biggest foreign currency reserves _ estimated at US$1 trillion _ as a result of surging exports and foreign investment and controls that limit the amount of money that can be taken abroad.
China also is under pressure to relax controls on the exchange rate of its currency, the yuan, which the United States and other trading partners say is too low and gives Chinese exporters an unfair price advantage.
The earlier changes and the ones announced Friday may mean that foreign currency will start flowing out of China as individuals buy foreign stocks and other assets for the first time and companies are freed up to make more investments.
The central bank said banks will be allowed to offer individuals a single foreign exchange account, rather than a separate account for cash transactions and one for funds transferred to their accounts from overseas.
Financial institutions will include the foreign-exchange accounts of foreign individuals in China as part of their management of short-term foreign debt, the central bank said.


Updated : 2021-02-28 03:03 GMT+08:00