CHINA-INTERNAL: ECONOMY
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Hongkong's South China Morning Post reported on November 29, that the People's Bank of China had decided on a policy shift to stop capital outflows and that payments of more than US$ 5 million will require the approval of central authorities. It also said that from September 2017, Beijing would ban deals involving investment of more than US$10 billion, mergers and acquisitions valued at more than US$1 billion outside a Chinese investor’s core business, and foreign real estate deals by state-owned enterprises involving more than US$1 billion. Shanghai’s municipal foreign exchange authority had told bank managers in the city that all overseas payments under the capital account bigger than US$5 million would have to be submitted to Beijing for special clearance before proceeding. There is speculation whether tighter control of outbound investment will put an end to the shopping spree by well-connected companies such as Anbang Insurance and Dalian Wanda. While the PBoC did not make an official announcement, the authoritative official newsagency Xinhua on November 28, published a two-line statement signed by the four ministerial bodies, namely the National Development and Reform Commission (NDRC), the Ministry of Commerce, the People’s Bank of China and the State Administration of Foreign Exchange, which was also posted on the central government’s portal website.
(Comment: The measures would have been necessitated by the fall in China’s foreign exchange reserves by US$873 billion since hitting an all-time high of US$3.99 trillion in June 2014. The reserves fell by US$46 billion last month, the largest monthly fall since January. There is additionally the issue of capital flight because residents are moving yuan assets abroad.
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