The popular Lude Talks on Youtube among overseas Chinese tells about a whistle-blower with the following story:
“Last year I went back to China (from the US) leaving several thousand dollars to my parents. They handed over the cash to Bank of China on a one-year deposit under their own names. At its expiry days ago, my parents went to the bank for the cash, but were refused by the bank that they need to have a passport with a valid visa and a flight ticket to get their money back…according to the latest foreign currency control measures by the government.”
According to Article 12 of Regulations of the People’s Republic of China on the Management of Foreign Exchanges, individual owners of foreign exchanges can hold these foreign exchanges on their own accord, deposit them in banks, or sell them to banks designated to handle foreign exchange businesses. The principle of “voluntariness to deposit, freedom to withdraw, payment of interests to bank saving deposits, and keeping secret for depositors” shall be implemented for the depositing of foreign exchanges by individuals.
In reality, Chinese citizens find it very difficult to get their foreign currencies out of the banks that they have deposited into. According the revised Regulations of Management of Foreign Exchanges in 1996, the government truly has the power to seal up or even confiscate individuals’ deposits of foreign currencies in China banks.
Its article eleven reads, “When there is the occurrence of BoP in-balance or a possibility of occurrence of serious BoP in-balance, or the occurrence of economic in-balance or a possibility of occurrence of serious economic in-balance, the government can take necessary protective or control measures to deal with this in-balance.”
The law does not have details about what “protective or control measures” to take, or what it means by “a possibility of occurrence”. And this gives the authorities lots of space and freedom to play around the law and creates a loophole for corruption.
As we know, China’s financial system is firmly controlled by the government, giving the country’s leaders a great degree of control over how much the RMB is worth. Officials set a daily benchmark rate for the currency and allow its value to move a smidgen above or below that level in currency markets. Chinese officials say each day’s trading activity helps determine the value they set for the RMB the next day, but they disclose few details about how that works.
As the RMB or yuan is a tightly-managed currency and the government has a tight grip of its foreign exchanges, how the system works has always been kept a secret from the general public. All properties and currencies in China are assets owned by the CCP as it governs everything. Thus the Chinese government has the ability to intervene to prop the RMB up through the mechanisms it uses to set its value, its $US3.05 trillion of foreign exchange reserves and through exchange controls.
According to the Wall street journal yesterday, China’s foreign-exchange reserves saw its biggest monthly drop in October in nearly two years, hit by a strong U.S. dollar that hurt the value of other holdings and likely prompted government intervention to shore up the yuan.
October’s decrease of $33.93 billion was the largest since December 2016 when Beijing was battling capital flight and burned through $1 trillion to defend the yuan.
The State Administration of Foreign Exchange, which manages the reserves, attributed the monthly decline to the impact a stronger U.S. dollar had on other assets. While economists said that valuation effect likely accounted for most of the change, a portion of the decline likely came from Beijing selling off reserves to defend the yuan. The Journal has reported.
To confront an economic slowdown as a result of the escalating trade war with the US, President Xi Jinping is attempting to win the support of China’s private sectors with a “confidence boost”, telling them that they “should feel totally reassured” with promises to offer tax breaks and financial help.
Last week, China’s top banking regulator is calling on domestic banks to double lending to private-sector businesses. “At least a third of new loans should go to private companies, with the ratio going up to 50 per cent in three years,” as Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, has confirmed.
According to Bloomberg, some Chinese banks are struggling to comply with unprecedented regulatory targets for credit to private companies because they aren’t sure who to lend to, a sign that authorities’ urgency to reverse an economic slowdown is muddying policy.
In a country where the state’s influence is felt everywhere, there remains little consensus on what, exactly, defines a “private” company. That leaves the new policy open to misinterpretation and even potentially to gaming, they said.
Official categories for lending currently include “state-owned,” “collectively owned,” “individually owned,” and “foreign-owned,” so targeting private firms is tough, said the bankers familiar with the matter. Each bank has its own definition of what a private company is, they added.
Nikkei Asia reports that “Private companies are struggling with a heavy debt load. There were 53 debt defaults from July to September, totaling 52.1 billion yuan, a record for any quarter, said CSC Financial. Of those, three-fourths came from private businesses.”
Also last week, China’s top legislative bodies have called for legal protection of private enterprises, claiming to safeguard the business environment and protect the interests of private businesses and their owners.
The Supreme People’s Procuratorate has requested its officials to treat private businessmen fairly and create more favorable conditions for their lawsuits, while avoiding freezing their bank accounts or other assets in economic cases.
The Supreme Court has called for lest criminal coercive measures against economic violators, saying that turning civil cases into criminal cases is prohibited. It also says to redress mishandled cases related to private entrepreneurs.
The Ministry of Justice has formulated 20 measures to “safeguard private business operations”, saying that related authorities must be careful in sealing up, distraining and freezing Properties in civil enforcement activities.
Exiled billionaire Miles Kwok said yesterday the CCP’s top legislative leaders are all criminals and they should be charged by justice. “It is ridiculous that these criminals and corrupt officials now have the heart to treat Chinese private entrepreneurs with fair deals, claiming to rehabilitate after falsely persecuting tens of thousands, taking them into prison and confiscating their wealth.” Miles added, “No private entrepreneurs in the country would again believe in what they say; if one believes, he would be the greatest fool on earth”.
Miles told Steven Bannon and other US officials, “Now the CCP has control of top Wall Street bankers. When the CCP officials have come to take control of your trade, of your dollar and economy, they will have their hands into the breasts of your wives and daughters. There is no doubt about that!”
Miles says the CCP has always said one thing but done the other. The US government under Donald Trump and all his top officials already have the consensus in understanding the nature of the CCP. The whole world must be enlightened to the truth and stand up to safeguard what is right and just.
Everything is just beginning.