Beijing has tightened its monitoring of exporters’ overseas receivables in an effort to clamp down on capital flight amid the global financial crisis.
The State Administration of Foreign Exchange (SAFE) said it would require exporters from next month to report any overseas receivables due more than 90 days once goods are shipped.
Economists said the move underlined concerns among state leaders about potential capital outflows now that the mainland has stopped the yuan’s appreciation to shore up the diminishing value of its exports.
It would also encourage exporters to recoup receivables in a timely manner, which was desirable as the global credit crunch could exacerbate defaults in payments, the economists added.
“The government has serious concerns about a sudden outflow of capital triggered by talk of possible yuan depreciation and overseas liquidity problems,” Merrill Lynch economist Lu Ting said yesterday.
“From the exporters’ perspective, the new arrangement will help them get their money back sooner, because a three-month payment period is too risky.”
From December 1, exporters must inform SAFE of payments to be delayed by a year or more and outstanding claims exceeding US$5 million.
The currency regulator will also probe firms reporting deferred receivables that make up 20 per cent or more of their total export revenue.
SAFE said the rule would enhance supervision and management of exporters’ overseas receivables and the consistency of cross-border trade and its actual capital flows.
Earlier this month, People’s Bank of China governor Zhou Xiaochuan did not rule out lowering the yuan’s value to shore up export growth, triggering fears among investors who were betting on yuan appreciation.
But Mr. Lu said the chance of a yuan depreciation was small.
“It doesn’t help exports at this moment. Rather, stability in the currency regime is in the best interest of China and even the world,” he said.
The yuan stood at 6.82 against the US dollar yesterday, a level that has barely budged in a month, according to the China Foreign Exchange Trade System.
Mr. Lu did not see any signs of capital flight at present, pointing to a record-high trade surplus of US$35.24 billion and 21 per cent growth in bank deposits last month.
But he believed tighter requirements for overseas deferred receivables could help exporters amid global credit shortages.
A Ministry of Commerce report said the US credit problem had intensified on a global scale and was expected to hurt demand and worsen the world’s trading environment.
The mainland’s imports and exports would inevitably be hurt, and growth in trade could be cut to 20 per cent for a total of US$2.6 trillion this year, it said.
Beijing has unveiled a 4 trillion yuan (HK$4.54 trillion) plan to spur domestic demand and stabilise global growth by raising spending on infrastructure, transport, property and rural development.
1 comment:
Watch on Overseas Payments Tightened
Beijing steps up moves to stem capital flight
Denise Tsang
20 November 2008
Beijing has tightened its monitoring of exporters’ overseas receivables in an effort to clamp down on capital flight amid the global financial crisis.
The State Administration of Foreign Exchange (SAFE) said it would require exporters from next month to report any overseas receivables due more than 90 days once goods are shipped.
Economists said the move underlined concerns among state leaders about potential capital outflows now that the mainland has stopped the yuan’s appreciation to shore up the diminishing value of its exports.
It would also encourage exporters to recoup receivables in a timely manner, which was desirable as the global credit crunch could exacerbate defaults in payments, the economists added.
“The government has serious concerns about a sudden outflow of capital triggered by talk of possible yuan depreciation and overseas liquidity problems,” Merrill Lynch economist Lu Ting said yesterday.
“From the exporters’ perspective, the new arrangement will help them get their money back sooner, because a three-month payment period is too risky.”
From December 1, exporters must inform SAFE of payments to be delayed by a year or more and outstanding claims exceeding US$5 million.
The currency regulator will also probe firms reporting deferred receivables that make up 20 per cent or more of their total export revenue.
SAFE said the rule would enhance supervision and management of exporters’ overseas receivables and the consistency of cross-border trade and its actual capital flows.
Earlier this month, People’s Bank of China governor Zhou Xiaochuan did not rule out lowering the yuan’s value to shore up export growth, triggering fears among investors who were betting on yuan appreciation.
But Mr. Lu said the chance of a yuan depreciation was small.
“It doesn’t help exports at this moment. Rather, stability in the currency regime is in the best interest of China and even the world,” he said.
The yuan stood at 6.82 against the US dollar yesterday, a level that has barely budged in a month, according to the China Foreign Exchange Trade System.
Mr. Lu did not see any signs of capital flight at present, pointing to a record-high trade surplus of US$35.24 billion and 21 per cent growth in bank deposits last month.
But he believed tighter requirements for overseas deferred receivables could help exporters amid global credit shortages.
A Ministry of Commerce report said the US credit problem had intensified on a global scale and was expected to hurt demand and worsen the world’s trading environment.
The mainland’s imports and exports would inevitably be hurt, and growth in trade could be cut to 20 per cent for a total of US$2.6 trillion this year, it said.
Beijing has unveiled a 4 trillion yuan (HK$4.54 trillion) plan to spur domestic demand and stabilise global growth by raising spending on infrastructure, transport, property and rural development.
Post a Comment