China capital account opening

Zhou Xiaochuan-  August 19, 2013

China is at a crossroads. The new leadership has so far shown determination to reform and to find solutions to excessive savings. Here are some key facts for 2013.
 
March 2013 : Zhou Xiaochuan reappointed as the Governernor of the People’s Bank of China (PBoC)

China will promote the convertibility of Renminbi under capital accounts step by step, although the yuan's increasing cross-border use will accelerate the process, People's Bank of China (PBOC) governor Zhou Xiaochuan said Wednesday, March 13, 2013.

Source: http://news.xinhuanet.com/english/business/2013-03/13/c_132231456.htm

May 2013 : Reshaping the growth model

Officials at an executive meeting of the State Council led by Premier Li Keqiang said on Monday May 6, 2013 that China would propose an operational program within the year to make the yuan more convertible in the capital account.

The move comes after Li promised in March to open the economy further to market forces and take away some power from government departments as part an effort to reshape the growth model.

Ding Zhijie, head of the School of Banking and Finance at the University of International Business and Economics, said the full capital-account convertibility would be a systemic foundation for China to be more involved in the global economy.

Officials also called for a mechanism to let individuals invest overseas, which echoed an announcement in January by the central bank, saying it would proactively prepare for a trial of its qualified domestic individual investor program, known as QDII2.

The program, which was started by the government in 2006, allows Chinese individuals to buy securities in overseas markets through asset managers and funds.

Source : http://usa.chinadaily.com.cn/epaper/2013-05/08/content_16484988.htm

Next step: third plenary meeting of the Communist Party's 18th National Congress slated for this autumn

Huang Yiping, managing director and chief economist for the emerging Asia department at Barclays Capital, said that fiscal reform and loosening of the hukou system would likely to be implemented soon, followed by measures on interest rate and exchange rate liberalization and opening up the capital account.

Source : http://english.caixin.com/2013-05-16/100528978.html

Potential consequences on real asset prices

This could release a wave of Chinese savings abroad, radically shifting real asset prices up and government bonds down, especially in America.