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China may allow multinationals to conduct internal forex trade

(Xinhua)
Updated: 2007-04-29 09:14

China is considering allowing the subsidiaries of multinationals to complete inter company transactions using foreign exchange, Deng Xianhong, vice director of the country's forex watchdog has said.

The State Administration of Foreign Exchange (SAFE) said this would allow multinationals to by-pass SAFE which now requires foreign companies to purchase foreign exchange from SAFE, Deng said without elaborating.

China will also strengthen monitoring irregular cross-border cash flow and illegal forex dealings, he said.

SAFE will ease restrictions on individual and company use forex as well as broadening the scale and types institutions that can conduct overseas financial investment, Deng said.

China has announced a series of plans aimed at trimming the country's huge international payments surplus earlier this month.

The country's forex reserve had reached 1.2 trillion U.S. dollars by the end of this March, up 37.36 percentyear on yearwhile its trade surplus reached 46.44 billion U.S. dollars in the first quarter of 2007, nearly doubling the 23.3 billion U.S. dollar surplus in the same period last year.