Capital inflows to China may increase: forex regulator

A growing trend of global recovery, expectations for Renminbi appreciation, interest margin between Renminbi and foreign currency and rapidly rising asset prices will lead to an increase in cross-border capital inflow, said Yi Gang, head of the State Administration of Foreign Exchange (SAFE).

Yi also predicted that China's international payment surplus may be higher in 2010.

The more stable trend of global recovery has led to the warm-up of overseas demand. The "Go Out" strategy has helped to boost export and the central government's favorable policies are creating a positive environment for the rebound of China's export.

Meanwhile, China is experiencing a faster recovery and prices of productive factors including labor are still competitive. The rebound of the major developed countries is speeding up, and the financing function of their financial markets is also recovering. With the multinational corporations' active expansion and global distribution, "foreign investors' stepping into China will accelerate again,"

Currently, the central banks in the U.S., Europe and Britain are keeping their interest rates close to zero. China's relatively high interest rate and expectations for Renminbi appreciation will bring more cross-border capital inflow pressure, Yi analyzed.

However, China's expanding import and "Go Out" strategy have a positive effect in realizing international payment balance, said Yi, vowing that the SAFE will strengthen forex management and regulation on cross-border money flows.

By People's Daily Online