China will create an open, competitive domestic currency market and should let a flexible exchange rate mechanism regulate the impact of capital flows and balance international payments, a deputy head of its foreign exchange regulator has said.
Writing in a State Administration of Foreign Exchange (SAFE) publication on Thursday, Fang Shangpu said a so-called "negative list" would be established, based on prudential assessment. Analysts believe such a list would specify sectors of the foreign exchange market that would remain subject to controls.
According to Fang, foreign exchange conversion limits would be gradually phased out for "microscopic areas", a term interpreted by analysts as meaning transactions by individuals and companies.
