Waitingfor perfect timing could mean reform.doc

Waiting for perfect timing could mean reform never happens: Study? BEIJING - China has a strategic opportunity to ease curbs on capital flows to take advantage of lower valuations for Western companies and raise the yuans global status, a central bank study has suggested.? China doesnt face great risks if it opens up its capital account, a goal that was included in the 12th Five-Year Plan (2011-15), the Peoples Bank of China publication Financial News reported on Thursday, citing a study by the survey and statistics department.? If we wait until conditions for interest rate liberalization, currency liberalization and yuan internationalization all mature, we might never find an appropriate time to open up the capital account, said the report, written under the direction of head researcher Sheng Songcheng.? Now is the time to do so because low valuations定价 in overseas markets offer a rare investment opportunity for Chinese companies.? The Stoxx Europe 600 Index, even with an 8 percent rally this year, has fallen 34 percent since July 2007, driven down by global financial turmoil and the eurozone debt crisis.? Too much emphasis on preconditions could easily make (a process of) gradual reform become negative and stationary, thus delaying the right time, the report said, adding that those presumed preconditions and the full convertibility of the yuan could promote one another simultaneously.? The study said China would not face big risks if the capital account was opened up, because most assets and debts in commercial banks are denominated in yuan, and most foreign-exchange assets are bonds whose principal and interest payments wouldnt be easily affected by market price fluctuations.? In addition, outstanding short-term foreign debt is only a small proportion of Chinas debts, and risks in property as well as the capital market are basically controllable.? The study said in one to three years, China could loosen its reins on direct investment controls and encourage enterp