Oh dear. Via Nikkei:
As China allows the yuan to depreciate to a level not seen in 11 years, financial authorities have rolled out measures to stem capital outflows from the mainland.
The new rules include stricter oversight of banks in times of capital flight and restrictions on real estate developers’ access to foreign currency bonds. If the financial system is judged to be on the brink on instability, the State Administration of Foreign Exchange, or SAFE, will declare the situation “abnormal.”
Under that assessment level, banks will be evaluated on the amount of yuan wired offshore and the volume of foreign currency sold. If the levels stray too far from the national average, the bank’s grade will diminish. Such lenders will then face limits on banking activities.
China is tolerating the softer yuan to ease the impact on domestic exporters during the prolonged U.S. trade war. But the government looks to avoid a repeat of 2015, when currency traders dumped the yuan after authorities lowered the reference rate.
…SAFE has also ordered lenders to request extra documentation before signing off on offshore remittances. If a parent wishes to pay school expenses for a student studying abroad, an acceptance letter must be presented. To transfer money for other reasons, documents such as a work permit must be furnished.
…”Wiring money overseas is not allowed for the purposes of purchasing real estate or insurance products,” said a representative at a second-tier Chinese bank.
That does not bode well for the numbers of Chinese students coming to Australia nor what they can buy when they get here. We’ve already seen Chinese student number peak, from The Australian:
In the first five months of this year 35,825 Indian students started new courses in Australia, 48 per cent more than the previous year.
The number of students from Nepal — another strong growth market — starting new courses was 32 per cent higher.
In contrast, the number of commencing students from China, the main country driving the past six years of export growth, was unchanged in the first five months of this year…
We can see this in short term arrivals:
We also know that capital controls since 2016 have demolished the inflow of money laundering capital into realty:
It appears both declining trends are about to get worse.
Spare a thought for Highrise Harry.
