China Eases Currency Rules

BEIJING -- China announced changes to its foreign-exchange rules to address surging growth in its hard currency reserves, saying domestic companies can now keep their foreign-currency income overseas and pledging tougher penalties for illicit capital inflows.

The new rules were announced late Wednesday and take effect immediately. They are part of a government effort to better regulate the flow of capital in and out of China's fast-growing and increasingly internationalized economy, while also moving toward a more flexible exchange rate mechanism for the Chinese currency.

The U.S. Treasury Department welcomed China's move to significantly overhaul its foreign-exchange regulations.

"The removal ...