HONG KONG - China is nearing its goal of allowing the yuan to be exchanged for foreign currency without any limits on the amount, the South China Morning Post reported yesterday.
The move, when achieved, will allow greater flexibility to Chinese investment overseas and underlines China's ambition to transform the yuan into a major global currency.
The paper quoted Mr Pan Gongsheng, vice-governor of the People's Bank of China, who was addressing a wealth forum hosted by the local government in Qingdao, Shandong province, on Saturday.
"We are not too far away from the yuan capital account full convertibility," said Mr Pan.
As part of the latest step to open the capital account, China will soon launch the new Qualified Domestic Individual Investor programme, or QDII2, a long-expected scheme that promises to give Chinese individuals opportunities to directly invest overseas.
"The QDII2 will remove the block on individuals investing overseas," Mr Pan told the forum.
He said that China has also previously taken steps to open up its yuan capital account through schemes such as the Shanghai-Hong Kong Stock Connect, a similar plan to link the Hong Kong and Shenzhen stock exchanges as well as the already established Qualified Foreign Institutional Investors programme.
The steps are all efforts that will help to internationalise the yuan and encourage cross- border investment, Mr Pan said.
China is drumming up efforts to boost the yuan's global use as it seeks to have it added to the International Monetary Fund's (IMF) Special Drawing Rights basket of currencies that already includes the dollar, euro, yen and pound sterling, according to Bloomberg.
The use of the yuan globally could raise its standing in the global financial system and mark an important step in Beijing's emergence as a global power.
IMF managing director Christine Lagarde has said it is a matter of time before the yuan is included in the IMF's unit of accounting, although officials in the United States have said the currency is not yet ready to join, Reuters reported.
Washington has long alleged that Beijing has kept the yuan artificially low to give Chinese exporters an unfair competitive advantage, charges which Beijing denies.
The IMF is reviewing the Special Drawing Rights basket and the inclusion of the yuan later this year.
China maintains strong control of the yuan's value over concern that unpredictable currency inflows and outflows could harm its economy. The currency is now among the top 10 held as reserves by foreign countries.
The newly launched Beijing-led Asian Infrastructure Investment Bank (AIIB) is also expected to facilitate wider international use of the yuan.