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China to crack down harder on 'hot money': govt
2008-07-03
BEIJING (AFP) - China will launch a forex monitoring system to scrutinise checks on the authenticity of export transactions, the government said, in its latest move to crack down on speculative capital inflows. Exporters must have their revenues audited by banks before they can exchange the money into the local currency, said a statement posted on the commerce ministry's website late Wednesday. The new system is aimed at "enhancing the supervision of cross-border capital flows and improving checks on the authenticity and consistency of the export transactions and the foreign exchange settlement involved," it said. The system will roll out nationwide on July 14, said the statement, which can be found also on the websites of the State Administration of Foreign Exchange (SAFE) and the customs bureau. Meanwhile, companies will be required to register their export revenue received in advance and deferred payment of imports, the statement said. This is to "prevent the fraudulent export transactions that disguise the movement of speculative capital into China... and the convergent large-scale capital outflow in the future," it added. Speculative money is entering China as investors hope for gains from factors such as the continued strengthening of the yuan. China's foreign exchange reserves, by far the largest in the world, hit 1.80 trillion dollars at the end of May. That figure was up 40.3 billion dollars from April, against a rise of 74.5 billion dollars in the previous month. Experts said the difference was mainly a result of a cut in the amount of speculative capital inflows. SAFE, an arm of the central bank, has said that it made monitoring and curbing speculative capital inflows one of its near-term priorities. As part of its efforts, it ordered banks to submit monthly data on non-resident domestic currency accounts, Chinese media said last month.
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