In China's latest effort to control capital flight, authorities have banned Chinese citizens from buying property in Hong Kong using their credit cards.The use of Chinese credit cards to pay for a portion of property transactions is widespread in Hong Kong.
Willy Liu, chief executive of local real estate agent Ricacorp, said 15-20 per cent of new property buyers were mainland Chinese. The majority use UnionPay cards to pay for 5 per cent of the home price as a mortgage deposit in Hong Kong. Most of those transactions are worth at least HK$500,000 ($64,371), Mr Liu said, surpassing the $50,000 annual limit for personal foreign exchange imposed by China’s regulators.
UnionPay cards have been a common conduit for mainland Chinese to move cash offshore, and the company has sought to shutter those channels. In October, it said it had barred the use of its credit and debit cards to purchase investment-linked insurance products.
And so, as The FT reports, Beijing has stepped up curbs on capital flight by banning this use of cards for real estate deals...
UnionPay, China’s sole clearing house for bank card transactions, told property agents in the city that customers would no longer be allowed to swipe their cards for real estate transactions.
“It is strictly prohibited to use a UnionPay card issued in Mainland China for cross-border acquisition of property”, UnionPay said on Friday.
The crackdown by the state-controlled company comes as regulators grow anxious over the level of China’s foreign exchange reserves, which in January dipped below $3tn for the first time in five years.
Finally, while this is yet another effort by Chinese authorities to control capital flight (which we note seems to be something the Chinese are absolutely desperate to do, while western mainstream media keeps pumping the Chinese investment, growth narrative), it also seems like a common-sense cap of the madness of Chinese trend-following crowds.