In Singapore, a voucher system that sees mainland Chinese gamblers at the Marina Bay Sands permitted to use their China UnionPay bank cards to purchase casino chips has reportedly upset officials in Beijing.

According to a report from the South China Morning Post newspaper, the “customer voucher” scheme at the Las Vegas Sands Corporation property is apparently being run in violation of China’s strict outbound currency control laws although corporate spokesperson Ron Reese stated that the program had been designed to give guests “flexibility in purchasing a variety of goods and services” and is operated “in accordance with the terms and conditions of China UnionPay cards”.

The South China Morning Post reported that the scheme may have so far seen hundreds of millions of dollars flow from China to Singapore with Xie Zhong, Payment Settlement Director for the People’s Bank Of China, telling the newspaper that China UnionPay cards “should certainly not be used in casinos”.

Beijing reportedly put the squeeze on the multi-million-dollar outbound flow of illicit cash through Macau two years ago by imposing limits on China UnionPay point-of-service machines, which were reportedly being used to disguise overseas transactions. It also cracked down on the practice of pawnshops paying cash for products such as jewellery and watches bought with cards to subvert currency controls.

Earlier this month, the South China Morning Post reported that China UnionPay cut the daily withdrawal limit for its cards in Macau by half to around $626 after discovering that up to $1.25 billion had been withdrawn from automatic teller machines in only one month. This followed an earlier move that had seen card holders limited to withdrawing approximately $14,400 per year.

Faced with such restrictions on capital outflow, it seems many Chinese gamblers have now begun travelling further afield and this could have significantly helped the nation’s foreign exchange reserves post a larger than expected drop in November.

The newspaper reported that China’s foreign exchange reserves have decreased by one-quarter since 2014 and now stand at $3.05 trillion with Beijing being obliged to spend big in order to prop up its currency. Concerns reportedly abound that further spending of this type will accelerate the yuan’s decline, which has already seen Japan overtake China for the first time in six years as the United States’ biggest creditor.

“At the end of the day, national security is at stake for Beijing when it comes to the integrity of its currency and its outflow in massive amounts,” Macau political commentator Sonny Lo told the South China Morning Post. “This is what is behind these increasing moves by Beijing to stem capital outflow.”

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