“Wiring money overseas is not allowed for the purposes of purchasing real estate or insurance products”: banker in China
China’s State Administration of Foreign Exchange (SAFE) has rolled out a new set of currency controls to crack down on capital flight from China to other countries, particularly targeting real estate investments by Chinese individuals and companies. This new set of currency controls include limits for real estate investors that make raising funds via foreign currency debt nearly impossible and stricter oversight of China’s banks that handles these transactions.
These new rules regarding the banks kick in when SAFE declares the financial situation in China “abnormal,” which would then allow SAFE to crack down on outflows via the banks. But according to the Nikkei Asian Review, SAFE had not revealed what criteria will be used to classify the situation as “abnormal,” and fund transfers overseas locations could be blocked at SAFE’s whim.