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China’s Richest Families Worry About Moving Money Abroad
Currently, there is endless smog afflicting industrial cities in China. This development has forced the country’s richest families to look for an alternative place of residence overseas. However, a major barrier that is preventing them from relocating to these safer destinations is about moving their money abroad.
Transferring one’s accumulated wealth out of China as part of the emigration scheme is a difficult task. Experts say that it involves thorough research of regulations and policies both in China and in the country a person intends to migrate to. If thorough research is not done in advance, the transfer of money will prove complicated and lead to maximum loss of value.
At the moment, the rules of the game are restrictive and cumbersome to follow. The State Administration of Foreign Exchange does not approve applications for estate transfers across the border until the applicants have been accepted to immigrate to other countries. This regulation was put in place to prevent those with pending or unfilled permanent residence applications from planning money or estate transfers in advance.
China has also put additional controls to reduce cases of abuse of foreign exchange. Anybody who is planning to make overseas transaction exceeding $73,000, around 500,000 yuan, must first seek state approval which sometimes takes several months. In addition, the state allows approved money transfer transactions exceeding 200,000 yuan to be completed in installments. For instance, 100,000 or less will be processed first, another 100,000 yuan will be processed next and finally, the remainder of the money processed one year later. This may also derail someone’s plans of relocating overseas with his or her accumulative wealth.
However, the timeline indicated above only applies to approved money transfers. It does not factor in the time Chinese authorities spend to verify the authenticity and legality of the money or assets being transferred to another country. The authorities not only carry out checks on large amounts of Chinese well-off families but also on small amounts of money for middle-class families.
For many Chinese families that intend to relocate to overseas destinations, moving money or assets to those destinations would mean more than just planning for the relocation of the household. Countries such as the United States, Canada or the United Kingdom are considered safe havens for transferring personal wealth. One of the main reasons for this is because such countries enjoy more economic stability and predictability as far as economic policy is concerned.
Another reason why many people are considering moving their accumulated wealth to western countries is concerns about a depreciating Chinese currency. Experts say that the currency is expected to slide further in the near future pushing the wealthiest families in China to transfer their accumulated wealth now instead of waiting to incur losses.
Any person in China who has not been accepted as an immigrant is bound by an annual foreign exchange limit not exceeding $50,000. Some individuals breach this requirement by allowing their relatives and friends who have not reached the limit to help them transfer the money overseas. They also use stranger whom they pay a small fee to help them move money out of the country.
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