The Chinese government are imposing new currency restrictions in 2017, making it difficult for Chinese individuals wanting to move to Australia, as they have issued a statement which effectively makes it much harder for Chinese people to get their money out of China.
The decision to restrict overseas use of the renminbi represents a setback in China’s long-term drive to turn the currency into a rival to the dollar and euro in the global marketplace.
The country’s central bank said Tuesday that it will make it more expensive for investors to pressure the yuan to weaken against the U.S. dollar. A weaker currency generally prompts investors to look elsewhere to put their cash and would complicate the government’s efforts to generate spending and bolster economic growth.
Some of the country’s largest lenders, including Bank of China Ltd. and China Citic Bank Corp., are beefing up their internal checks on large foreign-exchange conversions by corporate clients, according to Chinese banking executives.
“We are now refusing all foreign currency transfers where the documents are not fully complete … previously the requirements were not so strict,” said a bank executive in Shanghai who asked not to be named. While official figures on Tuesday showed China’s GDP grew 6.9 per cent in 2015 and the economy was stable despite the turmoil on financial markets, capital outflows threaten to disrupt growth and force Beijing into a major devaluation of the yuan.
Meanwhile, financial regulators, together with the country’s security forces, are stepping up efforts to rein in illegal money-transfer agents who make a living by helping people move money out of China.
The efforts are meant to prop up the currency following the central bank’s surprise devaluation three weeks ago. They come amid signs that China—long a catch basin for the world’s money—is starting to see that money trickle out. Underground channels in Macau or Hong Kong were available to get money out of the country. Both these methods are now under increased scrutiny as the government tries to stabilise the yuan. “They haven’t introduced any new capital controls but the implementation of existing measures has been strengthened,” said another executive, who works at one of China’s big state-owned banks. For example, he said “if you want to transfer money to a private bank account opened with an American passport, all of the transfers need to provide an American tax identification number.”
Chinese companies can exchange yuan for foreign currencies only for approved business purposes, such as paying for imports or approved foreign investments
In September, the government introduced restrictions on cash withdrawals from foreign ATMs. For this year, individuals can now only withdraw the equivalent of 100,000 yuan ($22,000) in foreign currency from an overseas ATM using their China Union Pay cards. There was previously a daily limit of 10,000 yuan, but no overall limit on yearly withdrawals.
“We think the Chinese government will use tighter capital controls, its foreign exchange reserves and [reserve requirement ratio] cuts to manage the scale and consequence of capital outflows,” she said.
In view of the above, China just created big headache for high net worth Chinese wanting to move to Australia.
- The individual annual foreign exchange purchase quota of $50,000 is unchanged.
- Banks are “encouraged” to increase scrutiny of currency transfers.
- Banks must report any overseas transfers by individuals of US$10,000 or more.
- Starting in July 2017, banks and other financial institutions in China will have to report all domestic and overseas cash transactions of more than 50,000 yuan ($7,201), compared with the current amount of 200,000 yuan.
- Beijing is signalling to banks, companies and individuals that it disapproves of foreign spending and investment, except for a few purposes that are explicitly defined by the government (e.g. buying foreign-made machinery to increase the efficiency of a Chinese factory).
- Overseas property investment has been called out by at least one major Chinese bank as insufficient reason for transferring money abroad.
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