Balance financial reform and stability

Chinese people find it more complicated to convert the yuan into the dollar, although the $50,000 annual quota of foreign currency a person can purchase (or exchange) remains unchanged.

The State Administration of Foreign Exchange, in a notice issued on Sunday, has tightened scrutiny of foreign exchange conversion by requiring people to give additional information and proper explanation for converting one currency into another. This is understandable because the yuan depreciated by as much as 7 percent against the dollar in 2016, while the country's foreign exchange reserves fell from nearly $4 trillion in the middle of 2014 to about $3 trillion by the end of November 2016.

The flight of capital from China is behind the foreign exchange reserve meltdown, and if it is not stemmed, investors will speculate the yuan will continue to fall, generating more pressure for the further depreciation of the currency and continued contraction of the foreign exchange reserves - a vicious circle the monetary regulator would like to avoid at all costs.