China will launch a foreign exchange monitoring system to scrutinize 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, a statement posted on the commerce ministry’s Web site said late on 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 also be found on the Web sites 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 US$1.80 trillion at the end of May.
That figure was up US$40.3 billion from April, against a rise of US$74.5 billion in the previous month. Experts said the difference was mainly the result of a cut in the amount of speculative capital inflows.
SAFE, an arm of the central bank, has 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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