Exporters faced heightened credit risks in China

Increased supervision of the foreign exchange market as well as heightened credit concerns have increased the risks in exporting to China.

China's macro-economy might be on the mend - with growth and exports up, capital inflow reviving, and price deflation subsiding. But regulatory, sectoral and credit risks still abound, as recent developments show. Chinese authorities have recently been shoring up the exchange rate by tightening foreign exchange regulations.

As well as cracking down on smuggling, they have begun to review company compliance with rules on remitting export earnings. They will reward companies with good compliance records, including extension of the deadline on remitting export earnings from six months to one year, and by increasing the maximum amount of foreign exchange a company can keep from 15% to 30% of exports.

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