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A senior government official said Monday that capital flight has assumed a downward trend over the past few years.
Guo Shuqing, director general of the State Administration for Foreign Exchange and member of the 10th National Committee of the Chinese People's Political Consultative Conference (CPPCC), said that capital flight is a kind of underground economic activity aiming to seek hedging or evade regulation. Although it is hard to know the exact amount of capital flight, there is evidence to believe that it is going downward.
He said that departments concerned have tightened the implementation of forex policies to keep the front door wide open while blocking the side doors. While strictly cracking down on illegal trading, forex control evasion and dodging, smuggling and other illegal activities , the country has adopted such measures as lowering tariffs, removing non-tariff measures, simplifying examination and approval procedures for investing abroad, removing restrictions on buying foreign exchange, lifting the compulsory foreign exchange surrender and settlement and providing conveniences for individuals to buy foreign exchange, thus weakening the motives for enterprises and individuals to evade regulation. As a result, The amount of foreign exchange settled by individuals rose 2.5 times while individual purchase of foreign exchange dropped by about half in 2002.
Other factors contributing to the reduction in capital flight include the fluctuation of international financial market and the exchange rates of major currencies, the good situation of China's international payments, stability of the Renminbi exchange rates and the sagging black market for forex trading.
He said that the government will continue to deal with illegal forex trading and keep the market in good order.
He disclosed that the country uncovered 12,000 forex law violating cases, involving US$9.02 billion, and stormed 78 underground money houses and captured 519 suspects and arrested 27.
(Xinhua News Agency March 10, 2003)
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