China's capital account may be mostly open within five to six years, but reform of ailing banks will have to be completed first, the country's foreign exchange chief said on Saturday.
"In five to six years' time we'll see that most of the (capital) account under most situations will be convertible," Guo Shuqing, head of the State Administration of Foreign Exchange, said on the sidelines of the annual session of parliament.
China had a trade deficit of "several billion dollars" in the first two months of 2004, which should take pressure off the yuan currency - pegged at about 8.28 to the dollar - to appreciate, Guo told reporters.
But under the capital account, which largely covers flows of investment, China had a $20 billion surplus, Guo said. He did not elaborate.
The United States and others have pressured Beijing to relax its strict currency controls, saying the current peg is artificially low and gives Chinese exports an unfair advantage on world markets.
They argue that if the yuan was freely convertible, China's booming economic growth and exports would make the currency rise.
Guo said China would have to finish overhauling its state banks, which are struggling with an estimated two trillion yuan ($240 billion) in bad loans.
Late last year, China injected $45 billion into Bank of China and Construction Bank to help them recapitalise and prepare for stock listings.
Guo said it was possible that more than 25 percent of the banks - half of the "Big Four" that are the bedrock of China's financial system - could be sold off to strategic investors.
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