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China's foreign exchange regulator on Thursday denied media reports about official efforts to restrict foreign companies in the country from remitting earnings back home.
"Some media reports said that China would curb the repatriation of profits by foreign companies in China, which is not true. There is no change in the relevant policies," the State Administration of Foreign Exchange (SAFE) said on its Sina Weibo Thursday morning.
Currently, foreign companies operating in China can remit profits to their home countries by following the normal procedures and provisions, the regulator noted.The clarification came in response to a report by The Wall Street Journal on Wednesday, which said that China is stepping up efforts to restrain outflows of funds.
The measures Chinese authorities are planning but haven't publicly disclosed include "curbing the ability of foreign companies in China to repatriate earnings, shrinking the pool of Chinese yuan available for banks in Hong Kong to make loans, and banning yuan-based funds for overseas investment," the report said, citing unnamed sources.
China's foreign exchange reserves contracted by a record $108 billion in December 2015, falling to $3.33 trillion, data released by the central bank in January 2016 showed. The country's reserves stood at $3.99 trillion in June 2014, and the figure for 2015 represented the first-ever annual decline in China's foreign exchange reserves.The December fall in reserves was perceived as one of the reasons behind the fast depreciation in the yuan earlier this month, with some international speculators betting against the currency.
The reserves could fall by as much as $200 billion in January, according to a Reuters report on Monday, citing a strategist from Omni Macro Fund. But experts said that although China is facing pressure from a slower economy and increased capital outflows, some of the media reports about it have been exaggerated.
The central bank has taken a number of measures since late 2015 to manage flows of money in and out of the country, which is natural amid the current situation, Liu noted.On Monday, the central bank started implementing a reserve requirement ratio for offshore banks' domestic deposits, a move widely seen as a way to curb yuan speculation and reduce abnormal money inflows and outflows.
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