06/10/2009 Source: www.chinaview.cn

China is loosening its grip on the use of foreign exchange to encourage domestic firms to make overseas investment, as the country sought to diversify the use of its huge forex reserves.

The State Administration of Foreign Exchange (SAFE), the country’s forex regulator, said Tuesday in an online notice that it would allow all kinds of firms in China to invest their forex earnings in overseas branches.

Previously, only large domestic or foreign multinationals are allowed to do so. The other firms are required to submit their forex earnings to the government in exchange for the local currency, contributing to the huge pool of the country’s forex reserves.

The SAFE said in the same notice that it would allow firms to use self-owned forex and forex purchased with the yuan, expanding the source of forex that firms could use to invest in their overseas subsidiaries.

The administration sets a quota on such forex uses, which is no more than 30 percent of the firm’s equity.

Firms still need approvals from the SAFE to use forex in overseas investment, but the administration said it would simplify approval and forex remittance procedures to facilitate such practices.

The SAFE said the relaxed control was aimed to solve the financing difficulties of Chinese firms when they expand overseas, and such support for overseas expansion was meant to boost exports.

China’s forex reserves stood at 1.9537 trillion U.S. dollars by the end of March, the largest in the world. To play it safe, China’s huge reserves have usually been invested in low-risk but low-yield assets, such as U.S. government bonds.

06/04/2009 Source: www.chinaview.cn

China’s top anti-graft official Friday said Party and government departments should reform their systems to uproot corruption.

He Guoqiang, secretary of the Communist Party of China (CPC) Central Commission for Discipline Inspection (CCDI), listed five main sectors that reported serious corruption problems: construction contracts, real estate development, land and mining management, financial business and law enforcement.

He told a meeting of discipline departments to push the government to reform management of these five sectors and improve supervision on them, instead of simply tightening penalties on corrupt individuals.

The discipline departments should also help the Party and government to reform the promotion system, procedures of administrative approval, the management of finances, taxation, investment and government procurement, as well as the restructuring of state-owned enterprises, he said.

Through these reforms, the country would be able to prevent more corruption, he said.

New measures to prevent corruption should solicit opinion from the public and experts, He said, adding that effective ideas could be written into regulations or laws.

Some government and Party departments have tried to improve transparency of their work and supervision from the public.

The Ministry of Environmental Protection opened a public hotline on Thursday. People can directly inform the ministry of complaints about pollution and appeal to it if local environment authorities fail to solve problems.

In February, the Organization Department of the Communist Party of China (CPC) Central Committee also opened a website to receive complaints of local official malpractice in promotion.