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Chinese enterprises and residents cannot use renminbi in cash to buy foreign exchange-denominated traveler's checks, the Chinese forex regulator reiterated recently.
Domestic companies and the local operations of foreign firms must use their forex bank accounts or purchase foreign currencies from their renminbi accounts to buy traveler's checks, said the State Administration of Foreign Exchange.
Individuals can use their foreign currency in cash and in their accounts to buy traveler's checks, SAFE said in a circular. Alternatively, if they do not have forex, they can convert their renminbi cash at banks, or from their renminbi accounts, into foreign currencies to buy them, SAFE explained.
"The introduction of the regulations is aimed at further strengthening the monitoring of foreign exchange and standardize the management of traveler's checks," said the circular.
As the rules, which will be effective from April 1, are not different from previous regulations, the announcement seems like a repetition that the government will tighten its control of an exodus of its bulging forex reserves and will continue to fight against money laundering.
China always uses its huge forex reserves to maintain a stable exchange rate of the renminbi against the US dollar.
The circular also clarifies the qualifications to apply for traveler's checks.
"Only persons traveling on overseas non-commercial payments, like travel, education, pilgrimage, medical treatment and visiting relatives, can apply to buy traveler's checks," said the circular, adding that companies are not allowed to use the checks for trade or investment purposes.
At present, China allows its residents to buy foreign currencies worth US$5,000 maximum for overseas visits or education.
China's forex reserves reached US$403.25 billion at the end of last year, compared with US$286.41 billion a year earlier.
(Eastday.com March 22, 2004)
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