- UnionPay purchases limited to $5,000 per transaction
- Mainland visitors have been buying policies in Hong Kong
China’s foreign exchange regulator tightened restrictions on purchases of insurance products overseas, people with knowledge of the matter said, as the government tries to stem money outflows that topped $1 trillion last year.
Purchases of insurance products using UnionPay debit and credit cards will be capped at $5,000 per transaction effective Feb. 4, said the people, who asked not to be identified as the details aren’t public. There wasn’t a limit previously. UnionPay International said in an e-mailed response to questions that it will require merchants to “follow the rules and enforce policies,” without providing details.
Chinese people have been flocking to Hong Kong to buy insurance policies, which typically come with better service than on the mainland and also offer them a way to skirt controls on how much capital they can move abroad. Purchases of insurance policies by mainland visitors in Hong Kong reached HK$21.1 billion ($2.7 billion) last year through September, following a 64 percent increase in 2014, according to the city’s industry regulator.
The State Administration of Foreign Exchange didn’t immediately respond to a faxed request for comment.
A December jump in capital outflows brought the total amount of money that flowed out of China to $1 trillion, according to data compiled by Bloomberg Intelligence. Regulators have moved in the past month with a raft of measures meant to deter speculation that the nation’s currency will decline.
— With assistance by Heng Xie, and Jun Luo