During the 2024 Financial Street Forum Annual Meeting held in Beijing on October 18, Zhu Hexin, the Deputy Governor of the People’s Bank of China and the Director of the State Administration of Foreign Exchange, emphasized the importance of enhancing the quality of capital account openness with a focus on high-level foreign engagement. He announced plans to formulate a mid-term reform scheme aimed at facilitating foreign direct investment (FDI) in foreign exchange.
Zhu highlighted the need to improve the convenience of currency exchange for foreign direct investment by optimizing regulations surrounding foreign exchange registration, account management, and fund utilization. By simplifying business processes and shortening management chains, the objective is to create a favorable environment for foreign enterprises operating in China.
He also discussed the importance of steadily advancing the interconnectedness of financial markets. Zhu indicated that there would be efforts to refine the Qualified Foreign Institutional Investor (QFII) system, supporting the growth of patient capital, while collaborating with relevant departments to promote high-level openings in the bond market.
Furthermore, Zhu called for deepening reforms in cross-border financing management. He stressed the necessity of aligning policies with national strategic goals by implementing differentiated foreign debt management. The approach aims to optimize policies facilitating cross-border financing, including encompassing more light-asset startups and small businesses to broaden their financing avenues.
Zhu reiterated the importance of enhancing the regulatory capabilities and risk prevention measures related to openness. He underscored the need for a dual approach in managing the foreign exchange market, incorporating both macro-prudential and micro-supervisory measures.
On the macro level, he pointed out the need to improve monitoring and warning mechanisms for cross-border capital flows, strengthen macro-prudential management, and guide expectations to maintain the stability of the Renminbi at a reasonable equilibrium level. On the micro level, he advocated for rigorous regulatory requirements, leveraging regulatory technology to ensure comprehensive oversight of the foreign exchange sector, firmly combating various illegal foreign exchange activities to uphold a healthy market order.
