China's foreign exchange regulator said it will work to strengthen monitoring and administration of cross-border flows of funds and block the inflow of foreign capital on fictitious trade claims, according to Shanghai Securities News.
"Over recent years, continuous large inflows of foreign funds have increased the imbalance in the international payments and contributed to appreciation pressures on the yuan," the State Administration of Foreign Exchange (SAFE) said on Thursday July 12th.
The agency said that an initiative launched last November, in which 5,303 export firms were earmarked as needing close attention because they were suspected of speculative capital transactions through disguised trade flows, was showing initial results.
It said that between November and April, annual growth in advance payments of trading firms had dropped by 44 percentage points compared with the first 10 months of 2006.
For example, among those firms receiving special scrutiny, foreign exchange income levels in excess of their actual sales had dropped by 40 percent between the end of last September and the end of April.
The regulator added that it had recently set up a system for updating the list of such firms, in order to facilitate local branches to key an eye on the suspected offenders. That list now includes nearly 5,800 firms, it said.
SAFE added that this month it launched an information exchange system with SAFE branches across the country that give the agency the capability to match names and bank account details of the firms under scrutiny.
