BEIJING - China will further tighten controls on individuals' foreign currency purchases to try to curb massive capital flight from the country as the yuan falls sharply against the dollar.
Individuals wishing to convert yuan to foreign currencies will now have to provide more detailed information to their bank, including an explanation of the funds concerned in addition to their identity papers, said the State Administration of Foreign Exchange (SAFE). Each year individuals can convert up to the equivalent of $50,000, a maximum sum that will not change, it said on its website.
The tighter controls are aimed at preventing attempts to circumvent this quota. The idea is to "combat illegal transactions, money-laundering and clandestine banks", the agency said, vowing to multiply random checks and toughen its sanctions.
Banks must verify the authenticity of the information provided. In addition, from July, financial institutions will have to report to the central bank any international transfer exceeding 200,000 yuan ($28,800), in order to fight laundering, the central bank announced Friday.
The tighter controls are part of an array of measures taken by the Communist government to curb huge capital outflows. The equivalent of about one trillion dollars was transferred out of China in 2015 and another $690 billion in the first ten months of 2016, according to Bloomberg Intelligence estimates.
Slower growth in China, the weakness of the yuan and the recent rise in US interest rates are encouraging savers to invest their money in other currencies. The yuan is at its lowest in eight years against the dollar and the outflows are putting further pressure on the currency. Authorities are trying to support it by buying yuan, drawing on China's foreign exchange reserves which fell by nearly $70 billion in November.
Foxconn invests $8b in China LCD plant
Taiwan tech-giant Foxconn plans to build an $8.8-billion factory in China, state media said, amid reports its billionaire boss is cooling off on future US investments.
Foxconn, a major Apple supplier, will spend the vast sum on an industrial complex in the sprawling southern city of Guangzhou. The factory will make large-screen liquid crystal displays (LCD), the firm said at an event in the Chinese city on Friday. It will be operational by 2019.
"We have in China a government that knows how to be efficient and supports new technology," said Foxconn president Terry Gou in an interview with China's 21st Century Business. "As to whether we'll invest in the US in the future I've no idea. As a matter of fact, the new administration isn't in office and its new policies aren't in place," Gou added.
Foxconn employs around a million workers at its factories across China and has operations in more than 10 countries. In the US, it has a plant in Virginia for packaging and engineering which employs over 400 people.
Earlier this month Foxconn confirmed it was in talks over a new US investment, while Japanese telecoms giant SoftBank shares soared after President-elect Donald Trump unveiled a $50 billion deal with the two firms.
Trump announced the agreement -- which he said would bring 50,000 jobs -- in the lobby of Trump Tower in New York. Gou said he would only divulge details after discussions with relevant US authorities, but made no mention of it during the factory announcement Friday. The Guangzhou plant will be jointly run by Foxconn and Japan electronics firm Sharp, which Foxconn has a 66 percent stake in.