Expert: Concerns on capital flows overdone

Ju Jiandong, an economics professor at Tsinghua University, told the forum that the yuan is actually under strong depreciation pressure. The opening up of the capital account could result in the "bursting" of the renminbi bubble, Ju said.

Ma seemed far less concerned, saying that the currency's value is much closer to equilibrium than five to six years ago.

He Fan, a researcher at the Chinese Academy of Social Sciences, said that the interesting question is: Since China's capital account is already undergoing de facto opening-up, "why do the authorities bother to commit to further opening-up?"

His guess is that the central bank is seeking to reform the current regulatory system by deepening capital account liberalization. He said the way to address the "clumsy" and "inefficient" approval system is to improve exposure to the global monetary system.

In a separate forum, Dai Xianglong, former chairman of the China National Social Security Fund Council, said China's capital account convertibility is very likely to be realized in the coming five to 10 years.

"Promoting renminbi internalization is not to challenge the US dollar's position as the world's dominant currency, but (it comes) from an inner demand for further reform and opening-up of the Chinese economy," Dai said at a seminar hosted by the International Finance Forum in Beijing.

But it will take longer to persuade countries to use the yuan in their foreign reserves.

"The key lies in boosting international confidence in the renminbi, but that involves a series of complicated issues apart from economic development," said Dai.

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