…to reduce investments in the PRC: it’s getting harder to get the money back out, this time from foreign exchange controls designed to be limits on how much money in yuan can be exchanged for other currencies, like the US dollar, the British pound, and the Japanese yen.
China’s foreign-exchange regulator in recent months has deployed a new system to monitor individual purchases of foreign funds and has asked banks to reduce foreign-currency transactions. It has summoned bankers to its offices to give guidance and has grilled them when foreign-exchange activity spikes, according to executives at Chinese and foreign lenders.
Nice little bank you got there….
But it’s more than just threats; the government controls are having material impacts on business’ ability to do straight-up cross border business.
A European chemicals manufacturer recently faced delays in Shanghai in obtaining US dollars, threatening its deadline for an overseas licensing payment. The Bank of Tianjin is having trouble getting funds from mainland investors for a planned Hong Kong public stock offering. A water-treatment company struggled to withdraw $2,000 for an engineer to travel to the US.
[Hong Kong law firm Harvey Law Corp Managing Partner—Worldwide, Jean Francois] Harvey said a Chinese client is having problems wiring $15 million to a Hong Kong company that for two years has been helping it buy equipment for a South American factory. “There’s no indication that the money will go through,” he said, “and we heard from our client that it was due to restrictions on money transfer.”
It goes on from there.