Posted date: January 22nd 2016 . Author admin .
In a bid to strengthen its current weakening economy, China has begun to tighten its cash controls. The financial move could affect individuals and companies looking to invest in international markets such as the Australian property sector.
Although there were no specific changes to China’s foreign investment policy, the Chinese Government has urged banks to limit individuals’ and companies’ foreign exchange transactions under existing regulations. It appears that a number of Chinese banks have acted upon it, The People’s Bank of China (PBOC) held a meeting on Tuesday to pledge a crackdown on foreign exchange quotas and other state owned banks are following suit to delay or even block money heading out of the country (AFR). China currently restricts foreign capital outflow to US$50,000 in foreign currency a year.
The tightening of the foreign exchange transactions restriction could significantly impact Australia’s property markets, Chinese-backed developments in Australia and investors looking to invest in Australian property. Last year the ABC estimated that Chinese investors were pouring as much as $12.4 billion into our property sector; a figure that may be in doubt for 2016 – less money going out of China means less money pouring into Australia!
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