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