While China has reasons to maintain capital controls, the recent crackdown on three Hong Kong brokerages is not meant to discourage mainland outbound investment
3-MIN READ3-MINLawrence J. LauLawrence J. Lau is the Ralph and Claire Landau Professor of Economics at the Chinese University of Hong Kong, and the Kwoh-Ting Li Professor in Economic Development, emeritus, at Stanford University. Published: 8:30pm, 2 Jul 2026The China Securities Regulatory Commission recently fined three Hong Kong brokerages – Tiger Brokers, Futu Securities International and Longbridge Securities – over US$330 million for offering mainland investors access to overseas stocks without authorisation. This should not be misconstrued as a move to discourage overseas investment.It is merely an attempt to discourage mainland investors from illegal channels that violate China’s capital controls. This is evidenced by the fact that the investors were not penalised and instead given two years to unwind their positions.
While the offshore yuan is essentially fully convertible into all other major currencies in Hong Kong, control remains on certain capital flow items.
Moreover, over time, the yuan has been holding steady against the US dollar, and is widely expected to appreciate in the long run. What then is the purpose of this form of capital control?
