CHINA said Friday it would allow more domestic firms to retain foreign-exchange earnings to help spur their exports and put them on an equal footing with foreign companies.

　　The State Administration of Foreign Exchange (SAFE) said it had issued rules to allow such firms engaged in foreign trade to open foreign exchange accounts for current account dealings.

　　The rules would unify policies on the retention of foreign exchange by domestic and foreign firms and "create conditions for a transition from forced foreign-exchange selling to voluntary selling," it said.

　　They take effect on Oct. 15 and would allow "more firms, especially medium and small-sized firms, to establish accounts for handling foreign-exchange income and payments", it said in a statement on its Web site at www.safe.gov.cn.

　　"All domestic firms approved by relevant authorities to conduct foreign-related businesses and have foreign-exchange income on the current account will be able to apply to SAFE to open accounts," the statement said.

　　The firms would be allowed to retain foreign exchange equivalent to 20 percent of their annual hard-currency earnings in the previous year. Those without an earnings record would be allowed to retain no more than US$100,000, it said.

　　The government had said previously only selected exporters might be allowed to retain foreign exchange in an effort to help boost its foreign exchange reserves, the world's second highest after Japan, and keep the yuan stable.

　　Exporters must now sell most of their hard currency-earnings to banks, which then trade them on the Shanghai-based foreign-exchange market. Trading firms can buy dollars from banks using import documents.

　　"This will help support their exports and the development of foreign trade," the SAFE statement said.

　　Central bank Governor Dai Xianglong said earlier this year the government might allow more foreign-exchange holdings by firms if the yuan was under pressure to appreciate from the rising inflow of hard currency.

　　The move was expected to help ease robust growth in China's foreign exchange reserves, which were US$253 billion at the endof August, but was unlikely to affect the yuan's stability, analysts said.

　　"Foreign exchange reserves have reached a level that enable the government to relax its controls a bit," said He Qiang, professor of finance at the Central University of Economics and Finance. (SD-Agencies)