Chinese regulators have capped overseas withdrawals using Chinese bank cards at Rmb100,000 per year.
The new cap effectively functions as a gate that closes one of the few remaining simple paths for Chinese nationals looking to get funds out of China by modifying the Rmb100,000 ($15,400) limit. Previously, that cap had been per account — that cap has now expanded to single individual. The $50,000 cap on the purchase of foreign currency remains unchanged, according to the State Administration of Foreign Exchange (SAFE) in a statement on Saturday.
According to Financial Times reporting, the analysts’ take on the move is that China is once again tightening its already fairly restrictive capital controls — though the government’s official explanation of the move is an effort to limit money laundering and terrorist financing.
“I was not expecting this since outflows have been slowing. But by doing this, it clearly shows China’s desire to manage the outflows more aggressively, particularly on individual flows,” one analyst told the FT.
Consumers who overshoot the the Rmb100,000 quota will face a suspension from overseas transactions for the remainder of the year, as well as the following year, according to SAFE. Those regulations are in effect right now. Domestic card users will also be limited to withdrawing no more than Rmb10,000 a day overseas, it said.
The move, according to reports, will have limited impact — most of China’s biggest spenders also have foreign bank accounts and credit cards already.
Foreign exchange reserves in-nation had been on the upswing in 2017, pushed by both tighter regulations and a stronger renminbi. In 2016, a flood of offshore acquisitions drained China’s forex reserves — setting off last year’s regulatory clamp-down on outbound deals and foreign money flows.
November saw regulators tighten rules on outbound investment by requiring regulatory approval for some foreign acquisitions conducted through an offshore entity.