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China's foreign exchange regulator has unveiled steps to curb short-term debt incurred by importers, the latest step to relieve upward pressure on the yuan.

Importers who need to pay US$500,000 or more but have sought to delay the payment by over 90 days must register with the State Administration of Foreign Exchange (SAFE), a notice published on its Web site said.

Banks would be banned from selling foreign currency to importers who failed to register their liabilities with the foreign exchange regulator.

The move was aimed at “preventing foreign exchange for import payments on the current account from being held up domestically and turned into short-term foreign debt on the capital account”, the SAFE said.

A SAFE spokesman said the tighter controls on importers’ foreign exchange payments would help close loopholes for firms to use trade finance as a disguise for speculating on the yuan.

“Companies ought to pay foreign exchange after importing, but some importers have reached agreements with foreign firms to hold up foreign exchange domestically, with some lending the money out and some betting on a revaluation,” he said.

“Such capital will leave the country once the situation changes,” he said without elaborating.

Worried firms racking up foreign debt and using the money to bet on a revaluation of the yuan, the government has set limits on short-term overseas borrowings by foreign banks.

The government has moved to spur capital outflows, including letting firms keep more hard currency income and letting them invest more overseas to help relieve pressure on the yuan.

China’s short-term foreign debt was nearly US$99.7 billion at the end of September, up less than US$1 billion from end-June. Short-term debt had risen nearly US$22 billion in the first half.

The Chinese Government has resisted pressure to quickly revalue the yuan, but officials have pledged to gradually introduce more flexibility.