China Tries Easing Capital Controls

No progress in more than 10 years.

Caixin: China Picks 10 Companies for Currency Conversion Trial

The pilot program is part of China’s push to internationalize the yuan. Currently, multinationals operating in China need to keep a separate local currency cash pool supervised by the PBOC and a foreign currency pool supervised by SAFE. They need to seek SAFE approval every time they want to buy foreign currency under the capital account, several regulators and bankers told Caixin. Such controls deny businesses the freedom to buy and sell foreign exchange at will to hedge against currency fluctuations.

State-owned conglomerates Sinochem Corp., COFCO Group, China General Technology Group, Aviation Industry Corp. of China and global oil giant Royal Dutch Shell PLC are the five participants selected in Beijing, according to the central bank.

Sinochem completed the first transaction under the program, borrowing $10 million for its subsidiaries to settle foreign currency accounts. COFCO, China General Technology and Aviation Industry have also conducted transactions, the central bank said.

Maybe this time they'll follow through or maybe this is yet another rope-a-dope for the entire inflation/weak dollar crowd, the sixth in 13 years...