Like many Hong Kongers with family and business ties in mainland China, Ceci Chong would often carry cash back across the border — until she was stopped last summer by a Chinese customs officer.
She was caught bringing Rmb100,000 ($14,500) in family savings to Hong Kong — five times the cash limit imposed by China.
Her case was part of a crackdown on “financial ants”, who smuggle cash little by little from the mainland to Hong Kong, amid a broader campaign to curb a surge in capital outflows sparked by a weakening renminbi.
Customs authorities in Shenzhen, a high-tech metropolis across the border from the semi-autonomous territory, reported more than 1,000 cases of banknote smuggling in 2016, a 39 per cent increase from the year before and holding a total value at least Rmb171m. The vast majority of such activity is believed to go undetected.
China allows each person entering or leaving the country to carry up to Rmb20,000 in cash or the equivalent of $5,000 in foreign currency. But Hong Kong has no such limit on taking cash across its borders, creating an incentive for renminbi to be smuggled out of the mainland to Hong Kong, where it can be amassed, exchanged for another currency, and taken further afield.
Ms Chong says she thought physically moving the cash would save her from the complicated procedures and fees charged by both licensed and “underground” banks. She was fined Rmb8,000 and forced to move the money back to the mainland.
She regards the law as unfair. “It made me look like I was a thief even though it was our own money,” she said.
The practice is widespread. Mr Li, a textile factory manager working in the southern Chinese city of Guangdong who did not want to use his real name, said colleagues of his were often trusted to carry company money, in larger sums than permitted, back from the mainland.
“Many traditional companies like ours don’t trust the underground banks because no one can guarantee the money is safe with them,” he said.
Many of the financial ants, according to Shenzhen customs, were once “parallel traders” who made a living reselling in China hard-to-buy consumer goods such as baby milk powder sourced from Hong Kong.
As the depreciating renminbi pushes ever more money out of China, the traders have swapped their usual goods for cash, which they transport in luggage — or secreted about their person.
Last year Chinese state media reported that a woman had been caught with wads of renminbi equivalent to $270,000 taped to her body as she passed through Shenzhen’s Futian Port en route to Hong Kong.
“Such behaviour seriously damages the domestic financial order,” the customs district said in a statement on its website.
Analysts, however, doubt the clampdown will stomp out the ants’ journeys.
“This is not like the China of 30 or 40 years ago,” said Kevin Lai, chief economist at Daiwa Capital Markets. “Tourism and trading activities are so frequent and open today. It’s difficult to investigate everyone.”
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