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Yuan to be convertible in Tianjin

By Jin Rong (China Daily)
Updated: 2006-06-30 08:37

China may allow its currency, the renminbi, to become convertible under a quota system in a newly approved economic zone in North China's port city of Tianjin.

The initiative, a pilot programme that will be conducted with the help of the country's top foreign exchange regulator, will take place in Tianjin's Binhai New Area, Shanghai Securities News reported yesterday, citing Tianjin Mayor Dai Xianglong.

The report did not give details as to when the programme will begin and what the quota will be.

Large-scale commercial banks in Binhai New Area may also be allowed to engage in non-banking financial services in the area.

"In order to sharpen large-scale commercial bank's competitiveness, conditionally allowing them to branch out into non-banking financial services is a must," the Shanghai-based newspaper quoted Dai as saying.

The newspaper made no mention of when that programme would commence.

Dai, who served as China's central bank governor between 1995 and 2002, also confirmed that the State Council, China's cabinet, has given the go-ahead for the establishment of a 20 billion yuan (US$2.5 billion) Bohai Industrial Investment Fund.

This will be the first such fund in the country that invests directly in companies.

The banker-turned-mayor has made improving his city's financial industry a top task since assuming the post in 2002.

Two new banks, Binhai Development Bank and the Northeast Asian Bank, will be allowed to set up in the city to support the development of Binhai New Area, reports say.