BEIJING (XFN-ASIA) - China will continue to monitor export receipts for fake transactions intended to disguise the entry of speculative funds, the State Administration of Foreign Exchange (SAFE) said.
In a statement posted on its website, SAFE said that as of end-April it has classified 5,775 companies to be "of concern" and whose foreign exchange dealings are under specific surveillance.
"Over recent years, continuous large inflows of foreign funds have increased the imbalance in the international payments as well as the appreciation pressure in the yuan currency," it said.
"(We will) effectively prevent illegal inflows of foreign funds through the trading channel and strengthen the oversight of cross-border flows of money," it added
China is undertaking a series of measures designed to discourage inflows - including a reduction in incentives to export - while promoting outflows, including those via the Qualified Domestic Institutional Investor (QDII) program.
These initiatives come in the context of a broader government effort to curb an overheating economy via restrictions on liquidity.
SAFE said it will raise investment quotas under the QDII program, expanding the amount institutions with QDII status can invest overseas.
SAFE added that it launched this month an information exchange system with SAFE branches across the country which gives the agency the capability to match names and bank account details of the firms under scrutiny.
Last month 29 banks, 10 of them foreign, were disciplined by the government for helping funnel speculative foreign capital disguised as trade or investment into China's stock and real estate markets.
jianbo.wu@xfn.com
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