"China Banks Seem To Be Doing Whatever They Can To Avoid Paying Anyone In Dollars"

Tyler Durden's picture




 

By Dan Harris of China Law Blog

Getting Money Out of China: What The Heck is Happening?

Regular readers of our blog probably know that our basic mantra about getting money out of China is that if you have consistently follow all of China’s laws, it ought to be no problem. Not true lately.

In the last week or so, our China lawyers have probably received more “money problem” calls than in the year before that. And unlike most of these sorts of calls, the problems are brand new to us. It has reached the point that yesterday I told an American company (waiting for a large sum in investment funds to arrive from China) that two weeks ago I would have quickly told him that the Chinese company’s excuse for being unable to send the money was a ruse, but with all that has been going on lately, I have no idea whether that is the case or not.

So what has been going on lately?

Well if there is a common theme, it is that China banks seem to be doing whatever they can to avoid paying anyone in dollars. We are hearing the following:

1. Chinese investors that have secured all necessary approvals to invest in American companies are not being allowed to actually make that investment. I mentioned this to a China attorney friend who says he has been hearing the same thing. Never heard this one until this month.

2. Chinese citizens who are supposed to be allowed to send up to $50,000 a year out of China, pretty much no questions asked, are not getting that money sent. I feel like every realtor in the United States has called us on this one. The Wall Street Journal wrote on this yesterday. Never heard this one until this month.

3. Money will not be sent to certain countries deemed at high risk for fake transactions unless there is conclusive proof that the transaction is real — in other words a lot more proof than required months ago. We heard this one last week regarding transactions with Indonesia, from a client with a subsidiary there. Never heard this one until this month.

4. Money will not be sent for certain types of transactions, especially services, which are often used to disguise moving money out of China illegally. This is not exactly new, but it appears China is cracking down on this. For what is ordinarily necessary to get money out of China for a services transaction, check out Want to Get Paid by a Chinese Company? Do These Three Things.

5. Get this one: Money will not be sent to any company on a services transaction unless that company can show that it does not have any Chinese owners. The alleged purpose behind this “rule” is again to prevent the sort of transactions ordinarily used to illegally move money out of China. Never heard this one until this month.

What are you seeing out there? No really, what are you seeing out there?

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Sun, 01/17/2016 - 19:00 | 7059504 Sanity Bear
Sanity Bear's picture

Shit, I thought only my customers knew about this tactic.

Sun, 01/17/2016 - 19:08 | 7059538 Baby Bladeface
Baby Bladeface's picture

Dawai, dawai! And trading in their Yuans to gold Panda coins the Chineses somehow can not do?

Tell me another one.

Sun, 01/17/2016 - 19:14 | 7059558 HowdyDoody
Sun, 01/17/2016 - 19:23 | 7059593 Occident Mortal
Occident Mortal's picture

The big factor here is the USD strengthening.

 

The Fed didn't have to raise rates by much at all because it's not just about the interest rate. It's about the cost of USD.

 

USD has been rallying ever since the Fed started talking hawkish, and as USD rallies is sucks capital out of the rest of the world forcing the world to deleverage and in effect it acts as monetary tightening but via an FX mechanism.

 

This phenomena is very poorly understood and very few (if any) people are writing about it.

Sun, 01/17/2016 - 19:47 | 7059678 Escrava Isaura
Escrava Isaura's picture

 

 

Exact. China should pay in Brazilian Real.

Sorry. I couldn’t help to dream about that Brazilian middleclass life style dream with its currency being the global reserve currency.

Crime in Brazil would go down dramatically.

Sun, 01/17/2016 - 19:54 | 7059709 Captain Debtcrash
Mon, 01/18/2016 - 07:12 | 7060972 newbie vampire
newbie vampire's picture

"China is a state run government, hence what we rail again here regularly, they are not some long run superior thinkers as some believe. "

The primary reason could be their "best-educated" economists are graduates of the liberal "keynesian" Ivy league colleges.  Look how well those "Keynesian" economists with their warped theories have done for the US economy. 

China has been massively malinvesting in great big capital consuming zero return projects.  The real estate market is a good indicator with their ghost cities.  And now the CCP is dangling "residence permits" to entice the peasants to buy overpriced real estate in ghostly apartment blocks.  Pretty soon they're gonna run out of greater fools.

The PRC doesn't have a lot of problems except for a credit bubble, real estate bubble, bad debt delinquency bubble, banks with undisclosed liabilities, over capitalised n under-utilized industries, an over-valued currency Yuan (when you consider the problems they have), and best of all - a profligate govt. descended from King Canute which thinks it has inexhaustible foreign reserves to support the Yuan, Shanghai share market etc etc etc

If the Chicoms are trying to avoid paying in USDs, I believe the writing is already on the wall.  They are gonna run out of USDs faster than the Saudis.

Apart from that and a few million other reasons, they are just doing great.

Sun, 01/17/2016 - 20:53 | 7059932 weburke
weburke's picture

crime is not drug use related there?

surviving issues causing the crime there?

Sun, 01/17/2016 - 23:32 | 7060466 tarabel
tarabel's picture

 

 

If you define food as a drug, then crime in Brazil is definitely drug related.

Sun, 01/17/2016 - 19:30 | 7059618 Consuelo
Consuelo's picture

Why do those hovels always seem to be decorated around a poop-green paint motif...?

Sun, 01/17/2016 - 23:08 | 7060388 bluskyes
bluskyes's picture

These are the local colours. My great grandmother was Ukrainian. Furniture, and rooms were all painted the same way. Green, orange, and pink

Sun, 01/17/2016 - 19:16 | 7059564 tarabel
tarabel's picture

 

 

Okay. The ruble is looking like a real winner.

Sun, 01/17/2016 - 19:28 | 7059607 nmewn
nmewn's picture

lol

Sun, 01/17/2016 - 21:00 | 7059961 Latina Lover
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Hey Tarabel, I'd gladly trade you my Hyrnia's for  your Rubles.

Seriously, nearly all currencies in the last 2 years are getting crushed by the USD.  In south america, for example, take a look at the 2 year  charts for the brazilan real, Argentinian Peso, Colombian Peso etc. They are hideously ugly.

Sun, 01/17/2016 - 21:30 | 7060067 tarabel
tarabel's picture

 

 

I have a way with money. In fact, that's my philosophy-- away with money.

As soon as I get any, I trade it in on something durably useful.

But, yeah, Third World currencies are watching the tide go out like it was midnight at the Bay of Fundy.

I hope all the expats out there have plenty of guard dogs, concertina wire and thunder rods.

Sun, 01/17/2016 - 21:03 | 7059973 bid the soldier...
bid the soldiers shoot's picture

tarabel, sweetheart, I'd wait till the shit hits the fan before making your Cosmopolitan magazine pronouncements.

It ought to fan-hit it any week now.

Load up on canned baked beans.

Sun, 01/17/2016 - 21:24 | 7060052 tarabel
tarabel's picture

 

 

That's exactly the advice Cosmo gives. 

How did you know?

Mon, 01/18/2016 - 01:17 | 7060664 bid the soldier...
bid the soldiers shoot's picture

I was walking by your beauty parlor the other day and went inside to buy a bottle of Vitalis and saw you sitting under the dryer reading Cosmo.

I guess I should have said "hello".

Mon, 01/18/2016 - 01:47 | 7060704 tarabel
tarabel's picture

 

 

Indeed you should have.

Oh, and it's rude to read over other people's shoulders like that.

Sun, 01/17/2016 - 19:01 | 7059507 The Merovingian
The Merovingian's picture

No dorrroars for you!

Sun, 01/17/2016 - 19:03 | 7059509 DormRoom
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Yes, it's because we are now seeing an frenzied exit in the copper/commodities rehypothecation trade:

 

http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014...

Most links in the collateral chains are dog shit.  Everyone wants out.

 

Sun, 01/17/2016 - 19:02 | 7059511 nmewn
nmewn's picture

Get THEIR money out of China..."illegally"...lol...I mean, what kinda fucked up communist bullshit is that anyways?

Oh, yeah...it is fucked up communist bullshit.

"All YOUR money are belong to us!" - Vice Public Security Minister Meng Qingfeng

Sun, 01/17/2016 - 19:32 | 7059623 Alpacanio
Alpacanio's picture

In China, you can move 50K with no questions asked. In the US, if you even ask for 10K of your money, the facist government comes down on you. So what's the Diff? Seems like China offeres more feedom of moving cash then the USSA.

Sun, 01/17/2016 - 19:45 | 7059673 pakled
pakled's picture

Well to be fair, that's 50K over a year. The 10K limit is per day. I think US citizens can still move 50K out over the span of one year... or has that chnaged now too?

Sun, 01/17/2016 - 19:49 | 7059682 nmewn
nmewn's picture

"In China, you can move 50K with no questions asked."

Apparently not across their border!

No one is denying THE STATE across the fucking globe is out of control (least of all me). I was here ranting & raving AGAINST fucking progs (and ALL STATES) when Obama was demanding UBS and the Swiss open up their books for them to peek in.

Where were you?

Its none of their fucking business who's got what where and why, if its something criminal CATCH THEM IN THE ACT and leave everyone else alone.

Sun, 01/17/2016 - 21:01 | 7059963 Sorry_about_Dresden
Sorry_about_Dresden's picture

50k in rmd or 50k in usd?

big difference you know?

Mon, 01/18/2016 - 01:19 | 7060668 So It Goes
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Sorry about dresden:

Schlachthof-funf???

Wed, 01/20/2016 - 17:04 | 7073715 Sorry_about_Dresden
Sorry_about_Dresden's picture

Not a reference to Kurt. Never read him.

Sun, 01/17/2016 - 20:14 | 7059769 Urban Redneck
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Speaking of getting THEIR money out of the USSA legally...

Has anyone experienced abnormal one business day delays wiring USD out of the USSA recently?

I normally use Wells Fargo about 8-9 times a year since they do not use a correspondent bank and their wire desk is located on the west coast, but the last 2 transfers have been a day late (and it wasn't due to cut-off times, I'm not that sloppy).

If this keeps up or gets worse... having Apmex ship me gold eagles would not only be cheaper, but also faster.

Sun, 01/17/2016 - 19:03 | 7059516 Automatic Choke
Automatic Choke's picture

which really echoes the problem i have had with china stock market since they opened it up:

    how can you have a system which is both a free market, and is not a free market?

Sun, 01/17/2016 - 19:08 | 7059535 nmewn
nmewn's picture

When what you thought was a skittle shitting unicorn turns out to be a fluffy kitten eating dragon.

In other words, the socialist cronies talking their book lied to anyone who would listen about inveting in communist state owned industries.

I know, hard to believe.

Sun, 01/17/2016 - 19:49 | 7059686 zeroaccountability
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Use Quantum Algorythms?

Sun, 01/17/2016 - 19:03 | 7059517 lazysunday
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How does a country with 3T in USD run out of USD????

Sun, 01/17/2016 - 19:11 | 7059545 KesselRunin12Parsecs
KesselRunin12Parsecs's picture

that's rhetorical

Sun, 01/17/2016 - 19:13 | 7059557 tarabel
tarabel's picture

 

 

Well, first off, I think that's only a 3 T cash equivalent in reserves, not all of which is in actual dollar-denominated assets. And it used to be 4 T but is now falling a lot faster than it took to accumulate.

Second, many ZHers are crowing about Chinese de-dollarization and doing all their trade in yuan or some other bum-fucked paper, so what's the problem?

The problem is that the people who know the Chinese economy best want out of both China and the allegedly soon-to-be-gold-backed yuan.

Sun, 01/17/2016 - 19:19 | 7059580 besnook
besnook's picture

this sounds more like china is making a huge bet that they have the juice to beat the dollar or at least beat the crap out of it.

Sun, 01/17/2016 - 20:16 | 7059784 Hyjinx
Hyjinx's picture

Ya, I laugh my ass off too with all the stupid posts around here and the mystical yuan/ruble domination coming.  As if these basket case countries are more dependable than the US?  We suck but they suck waaay harder, that is why no one wants their toilet paper.

Sun, 01/17/2016 - 22:26 | 7060255 jaxville
jaxville's picture

I would not touch Remnimbi unless there was something I wanted to buy from Red China.  Maybe after some serious gold market makers sell for that currency.....

 Even then it's just more paper.  Red China, or any other country; will not back their currency in gold until AFTER a gold revaluation takes place.  That might not be as far off as I used to think.

  This story seems deflationary.  A gold revaluation is one of the best options to get currency into the economy without the risk of a loss of confidence. 

Sun, 01/17/2016 - 19:17 | 7059569 Sturm und Drang
Sturm und Drang's picture

It's just a piece of paper.

Sun, 01/17/2016 - 19:48 | 7059683 pakled
pakled's picture

I was assuming that they are trying to stay away from the FX markets for daily, routine USD purchases, to keep bids on the USD from driving the dollar higher. 

Sun, 01/17/2016 - 19:03 | 7059518 Dragon HAwk
Dragon HAwk's picture

When is a Conversion rate... Not a Conversion rate...

Sun, 01/17/2016 - 19:06 | 7059527 Latitude25
Latitude25's picture

What's the problem?  I thought the Chinese had the plates to actually print their own dollars?

Sun, 01/17/2016 - 19:37 | 7059640 bonin006
bonin006's picture

that's North Korea

Sun, 01/17/2016 - 20:55 | 7059942 Sorry_about_Dresden
Sorry_about_Dresden's picture

We sold Iran state of the art printing presses, and they took delivery, right before the revolution in 1979!

 

Sun, 01/17/2016 - 21:46 | 7060131 Holy Roller Empire
Holy Roller Empire's picture

If so, they for sure aren't state-of-the-art now.

Sun, 01/17/2016 - 19:07 | 7059529 R.R.Raskolnikov
R.R.Raskolnikov's picture

offtopic: the future markets are open and oil is b00ming to the bottom. Crude is down 3%.

Sun, 01/17/2016 - 19:42 | 7059663 Sudden Debt
Sudden Debt's picture

I wonder when the "investors" will realize that the Petrodollar is directly linked to the "wealth" of America.

Cheaper oil = demise of the US stockmarket.

 

Sun, 01/17/2016 - 19:09 | 7059540 Ironmaan
Ironmaan's picture

What am I seeing? I'm seeing the Fed and the banks manipulate and fuck the American people daily.

Sun, 01/17/2016 - 19:09 | 7059541 Kagemusho
Kagemusho's picture

Cyprus and Greece again, with szechuan and noodles instead of gyros and fetta. Currency controls prior to account lock-down and digital rape via bail-in, Mandarin-style. Next comes hard asset confiscation.

Sun, 01/17/2016 - 19:10 | 7059544 R.R.Raskolnikov
R.R.Raskolnikov's picture

if they can make fake Rolexes why not fake dollars.

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