There were strong noises on reform from China's premier Li Keqiang last week, when he said the government would simplify bureaucracy to encourage private investment, building on a March pledge to pare the state's role in the economy.
Premier Li is keen to underline this government’s reform credentials. He told a meeting of the State Council, China’s cabinet, this month that the government would produce a detailed “operational plan” to achieve capital account convertibility this year.
Growth is slowing in China, evidenced by weaker than expected April industrial production and investment data.
With this in mind, the government is keen to lure more foreign direct investment (FDI), which has lagged behind analysts’ estimates in April.
Deregulation
Last week, the country's foreign exchange regulator simplified the rules governing FDI, the latest step towards deregulation and market reform. The State Administration of Foreign Exchange abolished 24 rules governing foreign exchange registration, account openings, remittance, and conversions.
The move brings China a little closer to making its currency, the yuan, convertible under the capital account, and follows a previous round of FDI-related deregulation by November last year.
Investment rose 0.4 per cent from a year earlier to $8.435 billion, the ministry of commerce said. China drew $29.9 billion in foreign direct investment in the first three months of 2013, up 1.4 per cent from last year .
