China loosens capital control

China loosens capital control

BEIJING: China will allow domestic insurers to invest forex in
offshore debt markets, a step that could pave the way for
loosening of the country's tightly controlled capital account,
state press reported on Thursday.

The provisional rules will allow Chinese insurance companies
to invest up to 80 percent of their total foreign currency
holdings in offshore markets, the Xinhua news agency reported.

"It will help insurance companies broaden their investment
scope, improve investment returns and better diversify
investments," Xinhua cited the China Insurance Regulatory
Commission (CIRC) as saying.

Chinese investors are not allowed to invest in foreign
markets, frustrating large holders of foreign currency such as
insurance companies, which by the end of June this year had 9.775
billion in foreign currency assets.

The long anticipated policy change grants companies the right
to invest in overseas government and corporate debt, certificates
of deposit and other fixed income products, the report said--AFP