Chinese financial authorities keep track on every foreign financial transaction

Chinese regulators closely monitor the flows of foreign capital in and out of the country, government officials said Monday, as overseas interest in Chinese stocks grows. Foreign investment in China's stock markets began to rise rapidly after its stocks were included in the MSCI and FTSE indices, said Fang Xinghai, vice chairman of the China Securities Regulatory Commission (CSRC). The proportion of foreign holdings in Chinese stocks is currently 5%, he added in a panel discussion at the Boao Forum, which Beijing is trying to promote as Asia's answer to the World Economic Forum in Davos Foreign investors in Chinese publicly traded companies are still subject to a 30% ownership cap and have limited derivative instruments available in the Chinese markets. China lacks mature value investors and foreign investors will fill the void, Fang said. He added that the CSRC is "very closely" monitoring large inflows and outflows of foreign funds in Chinese stock markets and that China will create conditions to attract more foreign investment in stocks. The CSRC is confident of keeping China's capital markets stable while the country opens them, Fang said, adding that the regulator will take precautionary measures to ward off risk and maintain daily foreign investment quotas. Xuan Changneng, deputy administrator of the State Administration of Foreign Exchange (SAFE), said at the same podium that SAFE would also maintain regular monitoring of cross-border capital inflows. External factors behind China's currency appreciation, the yuan, are weakening, he added. The yuan gained more than 6% against the dollar in 2020 as China recovered relatively quickly from the coronavirus outbreak, and in January this year hit its highest level since June 2018 at around 6.42 yuan. The currency is currently trading at around 6.51 yuan against the dollar.