China added new restrictions on pulling yuan out of the country as authorities seek to prevent a flood of capital outflows from destabilizing the financial system.
Officials won't approve requests to bring the yuan overseas for the purpose of converting into foreign currencies unless applicants provide a valid business reason, according to people familiar with the measures drafted by China's central bank. The monetary authority has noticed funds are increasingly leaving the country as yuan payments, according to the people, who asked not to be named because they aren't authorized to disclose the measures.
China is throwing up fresh administrative roadblocks to contain capital outflows before a likely U.S. interest rate increase this month and the reset of Chinese citizens' $50,000 annual foreign-exchange quotas in January. The equivalent of $275 billion exited the country via yuan payments this year through October, versus a $101.5 billion inflow in the same period of 2015, as the Chinese currency weakened to an eight-year low against the dollar.
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