Bloomberg News reported yesterday, “While Bank of China didn’t provide figures, the 21st Century Business Herald estimated the lender has moved about 20 billion yuan (US$3.2 billion) abroad through Youhuitong, citing people with knowledge of the trial program. “Many commercial banks” in Guangdong offer a similar service, Bank of China said in its statement, without naming them.”

Apparently Youhuitong has been suspended while the PBOC and its anti-money laundering bureau request records of all previous transactions, according to a person familiar with the product, who asked not to be identified because he wasn’t authorized to speak publicly.

HSBC involved

Bloomberg reporters found that “HSBC Holdings Plc, which runs the largest branch network among foreign banks in China, offers its Chinese clients another way to access offshore mortgages while avoiding the cap on foreign-exchange conversion, according to a person familiar with the mechanism, who asked not to be identified without having authorization to speak publicly.”

How it works, “Customers deposit yuan with HSBC’s mainland unit or purchase its wealth-management products, and the bank’s overseas branch then issues a foreign-currency denominated mortgage using the China deposits as collateral, the person said. “We seek to abide by the rules and laws of the jurisdictions and geographies in which we operate,” said Gareth Hewett, a Hong Kong-based HSBC spokesman.

The article goes on to describe how, “Affluent Chinese have been moving money overseas in search of greater investment returns. China’s benchmark stock index has tumbled 66 percent from its 2007 record, while the government has clamped down on property lending to rein in rising prices.” 

While at the same time, “Chinese buyers, including people from Hong Kong and Taiwan, spent $22 billion on U.S. homes in the year through March, up 72 percent from the same period in 2013 and more than any other nationality, the National Association of Realtors said in its annual report on foreign home purchases.”

For more details see, Secret Path Revealed for Chinese Billions Overseas - Bloomberg, recommended