Regulators right to act to ward off financial speculation

China's monetary regulators have been strict in checking the background of foreign exchange purchases amid intensifying pressure on capital outflows and contracting foreign exchange reserves.

The State Administration of Foreign Exchange recently required the existing rule on information reporting regarding the purpose of foreign exchange purchases be implemented in a much stricter way. According to media reports, those who exchange foreign currencies are now required to give more detailed proof of their planned activities falling into such approved categories as tourist travel, education, business travel, visiting relatives, medical treatment, imports of goods, buying non-investment insurance products and consultation services.

For many who have advocated economic liberalism and those who truly believe in it - both in and outside China - the country's recent move to tighten regulations on capital flows goes against their long-held belief and thus is unbearable. They have argued that China should allow capital to flow in and out freely.