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Billions of US dollars to cross borders
By Xu Binlan & Zhang Dingming (China Daily)
Updated: 2004-12-28 00:43
Billions of US dollars are likely to cross the border in the next few years
thanks to a new policy that protects the personal property of inheritors and
emigrants.
The new rules apply to people emigrating from the Chinese mainland and to
overseas citizens inheriting assets on the Chinese mainland.
State Administration of Foreign Exchange (SAFE) officials estimated that
mainland assets of Chinese emigrants are worth US$6 billion to US$8 billion and
foreign people's inheritances in the mainland are worth US$1 billion to US$2
billion.
They expect about US$2 billion to be transferred outside of China every year
for the next five years.
"These are just rough estimates. We are not so sure. Because it is very
difficult to get an accurate figure," said Han Hongmei, a senior SAFE official.
The new policy, which became effective earlier this month, also marks a step
towards freer capital flow, a more flexible foreign exchange policy and,
eventually, a fully convertible renminbi, Han said.
The move is also conducive to more balanced international payments, said Han,
a director-general-level inspector, yesterday in an interview with China Daily.
"The need (from emigrating people to transfer their assets) has always been
there. And for quite a few years, the issue was raised by deputies of National
People's Congress and delegates of the CPPCC (Chinese People's Political
Consultative Conference) every year," she said.
"Now we feel we have full capabilities to meet the need."
The central People's Bank of China published the provisions last month.
Chinese mainland citizens moving overseas will be able to legally convert
their personal assets into foreign currency and transfer them out of the
mainland.
No applications have been made so far because the applicants need time to
prepare their documents.
However, SAFE and its provincial branches have received many inquiries.
Places that have the most inquiries include coastal provinces such as East
China's Jiangsu, Zhejiang and Shanghai; South China's Guangdong and Fujian; and
border provinces such as Southwest China's Yunnan and Northwest China's Xinjiang
Uygur Autonomous Region.
Han said SAFE is working closely with the ministries of public security,
supervision, foreign affairs, justice and the State Administration of Taxation
to draw up the rules and process to check applications.
"Our co-operation is very good," she said.
Han said SAFE will be very prudent in handling the issue to prevent illegal
funds flowing out through this channel and to ensure people have paid taxes.
According to the provisions, assets worth less than 500,000 yuan (US$60,000)
can be approved by SAFE provincial branches. If the amount is 500,000 yuan or
more, approval from the Beijing branch is required.
Han said if the amount is more than 1 million yuan (US$120,000), SAFE will
ask the ministries of justice and supervision to double check whether the money
going out is clean.
"We want to make the administration of the transfer orderly and efficient,"
she said.
"However, the eventual goal is to make the transfer easier."
So if operations during the initial period are smooth, the process will be
streamlined, she said.
For decades, China has been maintaining a policy of encouraging influx of
foreign exchange and discouraging outflow.
There had been no legal channel to meet emigrating citizens' demand to
transfer their assets, forcing many of them to use the black market and transfer
their money overseas illegally.
However, the hefty foreign exchange reserves, which stood at US$515 billion
at the end of September, motivated the country to change its "coming good, going
no good" policy.
In recent years, the country has steadily moved towards making the yuan more
convertible.
A slew of measures have been taken to ease restrictions on outflow of foreign
exchange.
These steps include permitting Chinese enterprises involved in international
business to retain more foreign currency holdings, relaxing requirement for
Chinese companies' investing in other countries and allowing individuals
travelling or studying overseas to convert more renminbi into foreign
currencies.
China has fully liberalized eight of the 43 categories of transactions under
the capital account specified by the International Monetary Fund. Only six
categories are completely inconvertible.
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