China allows banks to manage assets abroad-paper
SHANGHAI, Apr 18 (Reuters) Beijing will allow local banks to manage assets for domestic institutions and individuals outside China for the first time, state media said on Tuesday, in a move to help balance the country's international payments.
The measures, which take effect immediately, were authorised by three major Chinese government departments -- the People's Bank of China, the China Banking Regulatory Commission and the State Administration of Foreign Exchange, the media said.
''Allowing domestic institutions and individuals to hold more foreign currency assets and invest abroad will help improve the balance of China's international payments,'' the official Shanghai Securities News said.
''It will also enhance the level of China's opening to the outside world, and will be an important step to promote the full convertibility of the renminbi'', or the Chinese yuan, it said.
On Friday, China relaxed capital controls to make it much easier for individuals and companies to buy foreign currencies and invest abroad.
The easing of capital controls could counter the pressure on the yuan to rise generated by a record trade surplus and investment inflows.
China's foreign exchange reserves, the world's largest, rose to 5.1 billion in March, fuelled by foreign direct investment in the first three months of 2006 of .25 billion and a first-quarter trade surplus of billion.
Its huge trade surpluses have become a major weapon for critics in Washington to argue that Beijing should let the yuan appreciate more quickly, saying an undervalued currency gives China an unfair export edge.
Currency and trade issues are expected to top the agenda during a visit to the United States by Chinese president Hu Jintao this week.
REUTERS PDS PM0726