China's foreign exchange authority announced recently it will simplify the rules governing foreign direct investment (FDI), the latest effort to deregulate and push forward the RMB's convertibility under the capital account and internationalization of the currency.

The State Administration of Foreign Exchange (SAFE) will abolish 24 regulations for foreign exchange registration, opening accounts, remittance, clearing and settlement, according to the statement on its website.SAFE said the new rules will offer a registration system for FDI and outbound direct investment (ODI). In December 2012, SAFE already cut 35 administrative reviews and approval procedures and simplified 14 others.

It also shows that SAFE is following up on the State Council's recent decision to accelerate financial reform this year.On May 6, at a meeting of the State Council, Premier Li Keqiang called for a cut in red tape and unnecessary administrative approval procedures in order to accelerate reforms. Premier said at the meeting that the government would work on a plan for the RMB's convertibility under the capital account, though he did not offer a timeline.

China gained $29.9 billion of FDI in the first quarter of this year, up 1.44 percent from a year ago. FDI for 2012 fell by 3.7 percent, due to the sluggish global economic recovery.

The capital account information system that was launched in December 2012 has strengthened supervision of capital inflow and outflow, SAFE said in the statement.

There has been a massive capital inflow since early this year, including the unexpectedly high 14.7 percent year-on-year rise in exports in April, indicating a surge in hot money, Xu Hongcai, a scholar at the China Center for International Economic Exchanges, a government think tank, was quoted by China National Radio as saying May 12.