Recent news is reporting that Chinese authorities are pressuring foreign companies and brokers more heavily than ever before. In the last several years, there has been observed a recurrent attitude from the local authorities in China to keep an eye over the operations of the brokers in the county.
There is always an apparent increase in the pressure they put on brokers which tends to disappear as quickly as it has appeared and businesses in China suffer no change at all. However, in the last several months, a multitude of local firms registered in China had to deal with a lot of pressure from two government organizations including the State Administration of Foreign Exchange and the People’s Bank of China.
The two governmental institutions are responsible and have the authority for applying all rules and regulations regarding capital control.
Control capital laws can’t be violated anymore
One of the most controversial issues in the Chinese market was the way that brokerage companies could get their money outside of their country. They had to look for alternative ways and have found some solutions over time, but it seems that the Chinese authorities are making big steps into stopping those companies from violating capital control laws. The government is trying to enforce the regulations by identifying where the transitions are coming from and how to eliminate those loopholes.
Moreover, it seems that the pressure that companies in China feel won’t downsize anytime soon, but rather continue to increase after the latest seriousness intensification coming from Donald Trump.
The Chinese Yuan is in risk for depreciation
For several years, the Chinese Yuan has experienced a continuous and significant appreciation and has become one of the top traded currencies since then. Moreover, the US government has appreciated China as a potential effective currency manipulator which has only increased the value and power of the Chinese Yuan to a stable level between 6.30 and 6.97 per US dollar.
However, despite the success that the Chinese Yuan has experienced, the pressure to take any necessary measure to prevent the flight of the currency outside of the country continues to rise as it may result in a shortage of US dollars which is a scenario that no one would like to see.
Business is lucrative but more and more challenging
Brokers and regulators in China have been trying to solve their issues for many years but it doesn’t seem like things have drastically changed as forex brokers are still operating in the Country. The increasing pressure has created some challenges for companies based in China, but despite the more difficult setup to take money outside of the country, many companies still ignore the local authorities and continue to operate their businesses for high profits. There is a multitude of brokers who operate in the country but their base is located in Australia. Thus, the government is addressing the issue by pressuring foreign regulators