China has been on a long self-improvement journey and has been tackling all of the areas that could contribute to its global leader status. The financial sector is obviously one of them. Despite the rocky
cryptocurrency journey, its efforts to regulate it by issuing government-regulated cryptos and bashing the industry while promoting blockchain, China has also been tackling its foreign exchange sector and wants to become an important player in this field
State Administration of Foreign Exchange recently announced that it would be further opening up the foreign exchange sector in a bid to forge an open and competitive forex market.
Liberalization of foreign exchange markets and providing inviting regulations can do a lot for the economy of any country. We’ve seen a huge rise in the popularity of fx markets in Africa, ever since the regulatory changes that happened over the past few
years in the west, mainly Europe. Africa became a go-to destination for its easy-to-enter market and the lack of regulations. While precautions are necessary, as we’ve seen in the case of Africa, it would be hard to imagine China loosening its grip on the
market and will likely make sure that the fraudulent activity is kept at bay at all times.
Foreign exchange market centers have been moving away from the west and gaining momentum in other, less likely parts of the world. Fx markets and their success rates largely depend on the country’s available
Forex brokers and the regulations. The world has been slowly waking up to this and embracing more regulated but at the same time more open markets. China has been very vocal about its aims to become a global leader in multiple fields, including financial
one as well so this innovation in regulations seems very appropriate.
It has been in a competition with the west over the status of the most technologically and financially advanced pole of the world, and these new regulations are also a part of the plan to reach world leadership in these industries
China is famous for its skills for adapting to the changes and then morphing them to fit its narrative. So opening up the forex market will likely give the country the much-needed benefits while the governing bodies make sure that the process doesn’t get
out of hand or put the government in a tricky situation.
According to the official statement, China will steadily promote opening up in the capital account and it will encourage interconnectivity and the opening up of two-way connections between the financial markets.
The general aim of this procedure is to further liberalize the market and to focus on the high-quality development of trade and investments. China has been actively trying to attract more diverse investments and this move will likely help the country out
in that department as well.
Innovation seems to be the main word for China in 2020, we could even argue that it has been the main driving force of the country for the last couple of years. But this year is different because the government and the president have been very vocal about
their intentions and their goals. The regulations aiming to open up the foreign exchange market will also promote the development of new trade models and cross-border financial blockchain
service platforms. Blockchain has now been officially declared to be the technology of the future for China. The government has been actively promoting the adoption and innovation regarding blockchain even going as far as blocking all the negative comments
and posts about blockchain in its main search engine. When China decides to go for something they rarely come ill-prepared. The new approach to trade and fx also serves its general aim to become a leading country in adoption rates as well as innovative technologies
that use blockchain.
As mentioned before the opening up of the forex market can be quite risky for the country, especially if they have little experience with dealing with fx fraud. But China came prepared in this aspect as well. The Forex policy toolkit will be introduced to
assess and cope with external risks and to make sure that the national economy does not take a hit. This toolkit will also ensure financial security and overall smooth adoption of this innovation. While the general message of the regulation change is to open
up the market and to embrace foreign investments and trade between countries, China plans on tackling all the violations with a strong hand. So this case will likely not resemble the African scenario where it took multiple frauds to wake up the government
to the problems in the regulations.
While yes the open market allows for much growth, it is also extremely risky and if the right bodies aren't making sure that everything runs smoothly it could become a recipe for a disaster and China seems well aware that. The country seems dead set on maintaining
the orderly market while embracing innovation. If any country can do both at the same time it definitely would be China.
This could also be seen as the start of a larger trend that embraces fx and embraces the regulation that promotes openness but also tackles the main issues that fx markets usually face. China has a chance to set an example for others to follow, proving that
you can have an open market while also avoiding the scams if you put the right mechanisms and toolkits in place. This is a big step for China, who’s fx market was often considered more closed off than others. It is an important step towards China’s journey
on adopting the best practices around the world to embrace financial gains while demonstrating its ability to keep things under control.
It is hard to say how successful this innovation will be, but if China’s determinations are any indications it seems like the country is very serious about increasing its status in the world and establishing financial dominance.