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From December, Chinese citizens moving overseas will be able to legally convert their personal assets into foreign currency and transfer them out of China. The new rules also cover inherited money.
Currently, there are no official channels for such transactions and many transfer assets illegally.
This reflects a new approach on the part of China's financial authorities in their pursuit for freer capital flow and a more flexible foreign exchange policy.
"The relaxation of the restrictions is a major breakthrough in the regulation of personal assets transfer," the People's Bank of China said in a statement. "It will also push forward the process of the making renminbi fully convertible."
People wishing to transfer their assets overseas will have to apply to the State Administration of Foreign Exchange or to one of its branches.
The rules will also apply to Chinese citizens moving from the mainland to Hong Kong and Macao. Personal asset transfers from the mainland to Taiwan can also be serviced according to the rules, the central bank said.
China's currency is not yet fully convertible and the central bank has yet to announce a timetable for the yuan's total liberalization - a move the government says is its eventual goal.
In recent years, the financial authorities have taken a series of measures to ease control over international capital flow, including allowing companies involved in international business to retain more foreign currency holdings and the relaxing of restrictions on them investing in activities abroad.
It also allows individuals traveling or studying overseas to convert more renminbi into foreign currencies.
Despite the relaxation on capital flow, China's foreign exchange holdings continued to grow, thanks to a trade surplus and swelling foreign direct investments.
By the end of September, the country's foreign exchange reserves stood at US$514.5 billion.
The new rules will help better protect property rights, the central bank statement also claimed. "When people cannot transfer their personal funds as they wish, they cannot fully exercise their property rights.”
(China Daily November 17, 2004)
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