With the Chinese economy tanking, more and more wealthy families are trying to move large sums of money out of the country. As Mr. Bradsher notes in this article, “some methods are perfectly legal, like investing in real estate elsewhere, buying businesses overseas and paying off debts owed in dollars. Others, like Smurfing, are more dubious, and in certain cases, outright illegal.”
1. What is the Chinese annual legal cash control limit?
2. How are people trying to get around that limit?
3. What is smurfing?
4. How will the outflow of cash affect China’s economy?
5. What did China do to the renminbi that set off the crisis?
6. Explain the latest move by people to buy life insurance in renminbi.
Bradsher, K. (2016) Chinese Start to Lose Confidence in Their Currency. The New York Times, Feb. 13 (Retrievable online at http://www.nytimes.com/2016/02/14/business/dealbook/chinese-start-to-lose-confidence-in-their-currency.html)