Since 11th August last year, the day on which the central bank reformed its USDCNY fixing mechanism, the regulatory departments have been stepping up capital controls and the regulations on capital outflows were tightened.

Recently, the authoritative figures close to the decision makers in central government have all put forward their views on capital controls.

ANBOUND's research team is of the view that the views expressed by these authoritative figures suggest that the central government is intending to ease capital controls moderately while boosting market confidence on China’s economy, attracting more foreign investors as well as strengthening the management of capital inflows.

In the future, the economic fundamentals will continue to improve and the RMB exchange rate will stabilize, therefore the regulations on capital outflows might be relaxed moderately to lay the foundation for the further liberalization of capital account and the internationalization of RMB.