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China clamps down on capital flight risk as yuan weakens

Banks and real estate developers pressed to keep funds within the borders

Chinese banks face restrictions on converting the yuan to other currencies. (Photo by Akira Kodaka)

SHANGHAI -- As China allows the yuan to depreciate to a level not seen in 11 years, financial authorities have rolled out measures to stem capital outflows from the mainland.

The new rules include stricter oversight of banks in times of capital flight and restrictions on real estate developers' access to foreign currency bonds. If the financial system is judged to be on the brink on instability, the State Administration of Foreign Exchange, or SAFE, will declare the situation "abnormal."

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