BEIJING has launched a tough auditing and customs blitz on illicit capital flight, the official People's Daily reports, as the yuan comes under further pressure at Chinese currency markets. Overseas investment projects would in future undergo strict assets evaluation, an approval process and customs checks, under new regulations issued by the National Administration of State Property, the foreign trade ministry and Chinese customs, the paper said yesterday. Yesterday the yuan slipped to 8.889 to the dollar in Beijing, from 8.8703 on Monday. Centre officials declined to say if the central bank had intervened. Last month, China denied rumours it had ordered its overseas enterprises to repatriate funds to prop up the yuan. The currency has slipped 3.5 per cent in the past two weeks on the National Foreign Exchange Swap Market in Beijing despite central bank support. China does not publish figures for capital flight but Chinese investment in Hongkong is so heavy that the territory's stock market suffered a fall June 17, when the repatriation rumour broke. Many analysts suggest capital flight is the major reason for the yuan's current devaluation. Vice-Premier Zhu Rongji's tough measures to tighten up on overheated investment prompted a 25 per cent gain in the yuan's value early this month, almost wiping out losses made in June. The latest measures also more strictly regulate Chinese companies which have bought up small listed Hongkong firms. injected assets into them and then launched major share issues,
