Chinese authorities have introduced new border-control rules aimed at curbing both capital flight and the departure of highly qualified professionals from the country, CNBC reports.
The new regulations give state bodies legal authority to bar citizens from leaving China in certain cases. The restrictions may be applied if a departure violates export-control rules or poses a threat to the country’s industrial and technological security.
The measures also increase pressure on wealthy families, private bankers and trust companies that help move funds to other jurisdictions. Analysts say Beijing’s goal is to retain both capital and talent at home by limiting human-capital outflows that are seen as crucial for innovation and for technological competition with the United States.
The tighter border regime is being accompanied by broader tax enforcement. China’s government has imposed a 20% tax on assets transferred to offshore trusts, closing a tax loophole that had long been used for wealth protection.
Regulators have also imposed a 20% tax on dividends received by foreigners from foreign-invested companies. According to the report, the move reduces the appeal of acquiring foreign citizenship for Chinese entrepreneurs seeking to benefit from tax advantages.
