The government continues to heighten its efforts to internationalize the yuan currency. (Photo : Reuters)
The Chinese government is considering a pilot trial that will allow qualified individuals to make overseas investments, as decided upon in a recent State Council executive meeting presided by Premier Li Keqiang.
For the Bank of China's external supervisor Mei Xingbao, the move is regarded as an initial step toward yuan internationalization.
However, Mei noted that the trial is only small-scale and may yield a limited impact.
The supervisor said, "It will be open to residents living or working in the free trade zone, so it could benefit only a handful of people. But if fully implemented, it will have significant importance in the loosening of capital controls in China."
Though the State Council's statement did not detail the requirements for individual investors, media outlet Securities Times reported that interested investors should own over a million yuan worth of net assets. They must also pass a financial risk-preparedness test.
Mei also pointed out that the pilot trial's scale is below expectations as areas with lucrative markets such as Zhongguancun, a Beijing-located high-tech development zone, were not included.
"The central government is being prudent in carrying out reforms like this. There are risks of money laundering," he said.
The decision for the pilot trial came after a financial symposium held by Premier Li last week. He shared that the market turbulence will not affect the government's financial reforms.
On Tuesday, China has issued its first yuan-dominated bonds in London, marking as a crucial step in the currency's internationalization.
Currently, the government is in talks with the United Kingdom to initiate a stock trading link between London and Shanghai exchanges.
