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Billions of US dollars to cross borders
Billions of US dollars are likely to cross the border in the next few years thanks to a new policy that protects the personal property of inheritors and emigrants. The new rules apply to people emigrating from the Chinese mainland and to overseas citizens inheriting assets on the Chinese mainland. State Administration of Foreign Exchange (SAFE) officials estimated that mainland assets of Chinese emigrants are worth US$6 billion to US$8 billion and foreign people's inheritances in the mainland are worth US$1 billion to US$2 billion. They expect about US$2 billion to be transferred outside of China every year for the next five years. "These are just rough estimates. We are not so sure. Because it is very difficult to get an accurate figure," said Han Hongmei, a senior SAFE official. The new policy, which became effective earlier this month, also marks a step towards freer capital flow, a more flexible foreign exchange policy and, eventually, a fully convertible renminbi, Han said. The move is also conducive to more balanced international payments, said Han, a director-general-level inspector, yesterday in an interview with China Daily. "The need (from emigrating people to transfer their assets) has always been there. And for quite a few years, the issue was raised by deputies of National People's Congress and delegates of the CPPCC (Chinese People's Political Consultative Conference) every year," she said. "Now we feel we have full capabilities to meet the need." The central People's Bank of China published the provisions last month. Chinese mainland citizens moving overseas will be able to legally convert their personal assets into foreign currency and transfer them out of the mainland. No applications have been made so far because the applicants need time to prepare their documents. However, SAFE and its provincial branches have received many inquiries. Places that have the most inquiries include coastal provinces such as East China's Jiangsu, Zhejiang and Shanghai; South China's Guangdong and Fujian; and border provinces such as Southwest China's Yunnan and Northwest China's Xinjiang Uygur Autonomous Region. Han said SAFE is working closely with the ministries of public security, supervision, foreign affairs, justice and the State Administration of Taxation to draw up the rules and process to check applications. "Our co-operation is very good," she said. Han said SAFE will be very prudent in handling the issue to prevent illegal funds flowing out through this channel and to ensure people have paid taxes. According to the provisions, assets worth less than 500,000 yuan (US$60,000) can be approved by SAFE provincial branches. If the amount is 500,000 yuan or more, approval from the Beijing branch is required. Han said if the amount is more than 1 million yuan (US$120,000), SAFE will ask the ministries of justice and supervision to double check whether the money going out is clean. "We want to make the administration of the transfer orderly and efficient," she said. "However, the eventual goal is to make the transfer easier." So if operations during the initial period are smooth, the process will be streamlined, she said. For decades, China has been maintaining a policy of encouraging influx of foreign exchange and discouraging outflow. There had been no legal channel to meet emigrating citizens' demand to transfer their assets, forcing many of them to use the black market and transfer their money overseas illegally. However, the hefty foreign exchange reserves, which stood at US$515 billion at the end of September, motivated the country to change its "coming good, going no good" policy. In recent years, the country has steadily moved towards making the yuan more convertible. A slew of measures have been taken to ease restrictions on outflow of foreign exchange. These steps include permitting Chinese enterprises involved in international business to retain more foreign currency holdings, relaxing requirement for Chinese companies' investing in other countries and allowing individuals travelling or studying overseas to convert more renminbi into foreign currencies. China has fully liberalized eight of the 43 categories of transactions under the capital account specified by the International Monetary Fund. Only six categories are completely inconvertible. |
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