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China Arrests 800 in Banking Crackdown 02/27 05:53

   BEIJING (AP) -- More than 800 people have been arrested in a crackdown on 
unlicensed banking operations as Beijing tries to stem outflows of money from 
the country, the police ministry says.

   More than 380 underground banks that handled transactions totaling more than 
900 billion yuan ($130 billion) were broken up in the crackdown launched last 
year, according to the ministry.

   Communist leaders allow unlicensed financing activity to support 
entrepreneurs but try to stop activity they say threatens the state-run banking 
system, supports crime or helps people violate foreign exchange controls or 
other regulations.

   Companies and small investors began shifting billions of dollars a month out 
of China in late 2015, prompted by expectations the currency would decline in 
value. Beijing responded by stepping up scrutiny of outbound investment and 
banning some activities by individual investors.

   The police ministry statement Sunday gave no details of what those arrested 
were accused of doing but complained unauthorized money transfers paid for 
gambling, drug trafficking and smuggling.

   China's foreign exchange reserves have declined steadily over the past six 
months as the central bank spent an estimated $40-$60 billion a month to shore 
up the currency's exchange rate.

   The reserves fell to a six-year low in January of $2.99 trillion, though 
they still are the world's biggest. That was down $992 billion from a peak of 
$3.99 trillion in June 2014.


(KA)

 
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