Circular of the State Administration of for Foreign Exchange on Facilitating Trade Documents Reviews by Banks
On the 2nd of June, State Administration of Foreign Exchange of China dispatched the Circular of the State Administration of for Foreign Exchange on Facilitating Trade Documents Reviews by Banks in order to “facilitate trade authenticity reviews by banks and enhance trade facilitation”, the State Administration of Foreign Exchange of China(SAFE) decides the give all banks in China have the authority to access to the “customer declaration information verification” module of the foreign exchange monitoring system for trade in goods according to the Regulation of the People’s Republic of China on Foreign Exchange Administration.
what is this regulated?
The circular generally states that from 1st of September, all of the transactions made outside of China by any Chinese bank card holders over RMB1000 (approximately AUD200) must be reported back by the bank to the State Administration of Foreign Exchange of China. This could limit China banks holders’ consumption overseas.
How could this impact on Australian economy?
China, as Australia’s major trading partner, have investments in many categories, especially real estates and tourism. Once this circular execute, the demand for Australian housing could decrease(as China’s large contribution to real estate ) which means there might be a decrease in net exports(X-M) and investment(I) and this leads to a lower aggregate demand, failing to achieve the goal of strong and sustainable economic growth.
However, there are some people suggest that, it is better to have this circular because once the transactions are recorded, there might be a decrease in crime rate(especially money laundering) and therefore improves living standards.
What do you think of this regulation?