Chinese Bank Cards Subject to Spending Limits Outside the Country
In an effort to reduce the amount of money spent by Chinese citizens outside of the country, China is limiting withdrawal amounts for bank cards used while traveling abroad. The limits will be effective January 1.
Under the new laws, Chinese travelers may not withdraw more than 10,000 yuan ($1,570 in U.S. dollars) per day and 100,000 yuan ($15,700 USD) per year outside of mainland China. The rules will affect cardholders who use UnionPay bankcards, as well as MasterCard and Visa bankcards.
This bold move is largely driven by a recent drop in Chinese stock prices and the decline of the country’s economy. By limiting the amount of money that wealthy citizens can take out in other countries, China is hoping to reduce the outflow of capital that could further disrupt its already unstable economy.
Visa and MasterCard may not be heavily impacted by the regulation because they already have to pass their transactions through UnionPay. In order to enter the Chinese market, both credit card giants were required to pay a fee to run their card transactions through the monopolized UnionPay network.
In August, China saw a $142 billion outflow of capital, an increase from $125 billion in July. Both of these numbers were record highs, and up until last year, China had very little outflow.
With a rise in Chinese outbound tourism, the government has noticed “abnormally large” withdrawals that may be a sign of businesses falsely withdrawing money in a process known as “shadow banking.” Chinese officials hope these new limits will ensure that such practices are not regularly allowed.
About Bill Hardekopf
Bill Hardekopf is the CEO of LowCards.com and covers the credit card industry from all perspectives. Bill has been involved with personal finance for over 15 years. He is a frequent contributor to Forbes, The Street and The Christian Science Monitor.