BEIJING (Reuters) - Tighter rules in China on outbound capital flows have raised barriers for European and U.S. companies to get money out of the country, two prominent business lobbies said on Wednesday, with one saying dividend payments had been affected.
Chinese regulators have tightened restrictions on foreign exchange transactions and outflows in recent weeks amid growing concern that outflows are adding to pressure on the weakening yuan currency.
The foreign exchange regulator gave window guidance to banks last week to “control the capital outflow from China” by tightening approval requirements on cross-border transfers from capital accounts and dividend payments, the European Union Chamber of Commerce in China said in a statement.
The tighter rules would affect transfers of amounts above $5 million, regardless of whether the payment currency was in yuan or a foreign currency, the chamber said.
The yuan has lost nearly 6 percent against the resurgent dollar so far this year, taking it to more than eight-year lows.
Reuters reported last week, citing sources, that the State Administration of Foreign Exchange (SAFE) had begun vetting transfers abroad worth $5 million or more and was increasing scrutiny of major outbound deals.
Reuters could not immediately reach SAFE for comment.
The American chamber said it was aware China had taken steps to further manage capital outflows, and was “concerned about the added burden such approval requirements may potentially have on our member companies’ ability to move money overseas”.
The chamber, however, not give further details on the tighter measures or mention dividend payments.
“We will continue to monitor developments and seek clarification and guidance from SAFE on the process and procedures involved going forward,” said James Zimmerman, chairman of the American Chamber of Commerce in China.
The tighter rules have raised concerns among domestic and foreign companies that they will not be able to move funds easily out of the country, potentially disrupting business activity.
“The unpublished window guidance on the control of capital outflow is disruptive to EU companies’ regular business operations,” the EU chamber’s President Joerg Wuttke said.
“It also unnecessarily exacerbates uncertainties regarding the predictability of China’s investment environment.”
The EU chamber said that while some payments had been getting through, the chance of getting these payments approved currently was “very low” and even some previously approved dividend payments have been put on hold.
It added different banks and different SAFE regional offices were using different interpretations of the new guidance, with some regions setting the threshold as low as $1 million.
Reporting by Michael Martina in BEIJING; Writing by Adam Jourdan; Editing by Kim Coghill