Time is running out for Chinese to move stacks of money out of China
It's the news many people in China who are trying to get their money out didn't want to hear.
Starting from January 1, 2018, individuals will only be allowed to withdraw a maximum of 100,000 yuan (US$15,000) a year, regardless of how many separate bank accounts or ATM cards they have, according to a statement by the State Administration of Foreign Exchange.
Under the current rules, there is an annual ATM withdrawal cap of 100,000 yuan per bank card, which is why many people have a number of cards attached to a single account, or multiple accounts with different banks.
While people will be allowed to continue to hold several ATM cards, the annual limit will apply to the combined valueof all the withdrawals.
Sounds like cash withdrawals are screeching to a major halt. I can already hear it and it's deafening.
People can only move 100,000 yuan per year out of China
The foreign exchange regulator also warned that if any Chinese is found using mainland bank cards to withdraw more than 100,000 yuan from overseas ATMs within a calendar year, they will be barred from taking out cash abroad using any mainland bank card for the rest of the year -- as well as the following year.
I think I heard another loud screech.
These latest regulations are extremely restrictive, making it extremely difficult for people to make mortgage payments on homes they have bought abroad (if they haven't paid for them in cash already), or pay for children's tuition overseas, or in some cases to launder ill-gotten gains.
The regulator said the restrictions were "a necessary measure" to curb money laundering, terrorism financing and tax evasion."
It added some Chinese have been found to have used a large number of ATM cards to withdraw sums of cash overseas that far exceeded what was needed for "normal consumption", according to the regulator.
What exactly constitutes "normal consumption"? It would be interesting to know what that figure, or range would be...
The foreign exchange regulator also warned Chinese not to try to evade the rules. "People should not borrow other people's bank cards or lend them to others to help get around the regulation," the statement said.
Regardless, people knew these restrictive measures would be instituted in 2018, so there was (some) time to move as much money abroad as they could this year.
Nevertheless, the regulator says 100,000 yuan is plenty of money to spend for those traveling abroad, while "containing the large sums made by a few lawbreakers".
Will we see less mainland Chinese snapping up luxury homes and condos outside of China in 2018? That will be the sign these measures are really effective or not.