China to Widen Foreign Exchange Services in Beijing, Shanghai

By Judy Chen and Belinda Cao

Aug. 20 (Bloomberg) -- China will widen foreign exchange services for individuals in Beijing and Shanghai to meet rising demand for buying and selling currency, the government said today.

Trials in the two cities will let non-financial institutions offer foreign-currency services to individuals for the first time, the State Administration of Foreign Exchange.

The regulations will ``improve currency-exchange services to meet rising demand for these services by individuals,'' the administration said on its Web site today, without saying when the trials will begin or which institutions will be involved.

China's currency, known as the renminbi, cannot be freely converted, making it difficult for companies and individuals to take yuan in and out of the country. The government is easing restrictions on transactions to help slow the growth of foreign reserves which rose to a record $1.8 trillion at the end of June.

China approved new rules on Aug. 6, easing some controls on foreign currency management. It canceled a previous requirement for companies to transfer and sell foreign-currency earnings to banks.

The widening of foreign-currency services announced today means that non-Chinese people will be able to sell up to $500 worth of yuan a day. The limit will rise to $1,000 once individuals have passed beyond the country's customs checkpoints at airports, ports and other border controls, the statement said.

Shanghai, China's financial center, will allow approved non- banking institutions to provide such services in the city's Pudong district, according to a separate statement by the currency regulator distributed in the city today ahead of a news briefing.

Preparing for Expo

The trial services in the Pudong financial district will be a preparatory step for the World Expo that will take place in Shanghai in 2010, SAFE said in the statement.

Shanghai Zhangjiang ICE Foreign Exchange Ltd., a joint venture between Zhangjiang Group and International Currency Exchange (Europe) Plc, a UK-based private foreign exchange agency will be the first non-financial company allowed to offer the service, SAFE said.

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net;