How a Shanghai white-collar worker is joining frantic scramble to shift cash overseas as yuan hits seven-year low
Analysts question whether Beijing can realistically stem the flow of money abroad as people look to safeguard the value of their investments
Simius Zhang, a white-collar office worker in Shanghai, is determined to safeguard his family assets as China’s currency weakens.
Believing the yuan will continue to depreciate in the coming years, Zhang is maximising every possible channel to move his wealth into assets denominated in other currencies.
When China UnionPay – the state-backed payment services provider – banned the use of its clearing system for bank cards for buying investment-grade insurance policies in Hong Kong, the 36-year-old couldn’t help but give himself a pat on the back.
He had already bought three dollar-denominated policies in Hong Kong for his family at the end of last year, ahead of the latest move by Beijing to restrict the flow of cash out of the country.
He has already used up most of his US$50,000 annual quota for purchasing foreign exchange for 2016 and he will rush to buy dollars once the new quota is available in the new year. Every Chinese resident is allowed to purchase up to $50,000 worth of foreign exchange a year, according to China’s foreign exchange rules. Any amount above that requires special regulatory approval.
Zhang, however, said he was not just relying on shifting money offshore to mitigate against the falling value of the yuan.