Country Garden shuts China showrooms amid tighter foreign exchange controls

Country Garden Holdings Co Ltd said on Friday (March 10) it has shut some China showrooms that promote its Malaysian Forest City development to adapt to stricter foreign exchange policies and as it looks to diversify its sales strategy for the project.

The Chinese developer has sold thousands of apartments in its massive Forest City project in Malaysia's ambitious Iskandar special economic zone, with Chinese nationals accounting for 70 per cent of the buyers.

The closures comes as China tightens its grip on moving funds out of the country as the yuan plumbed more than eight-year lows. The tighter rules have created extra challenges for firms or deals relying on Chinese investment.

Country Garden said in a statement on Friday it was overhauling its mainland Chinese sales centres "to better fit with current foreign exchange policies and regulations" and as the firm looked to diversify its development strategy.

"Country Garden Group resolutely abides by relevant foreign exchange related rules and actively adapts it overseas development strategy to adapt to a constantly changing national and international policy and legal environment," it said.

The firm added that the current foreign exchange controls were "necessary", but that they could not continue forever.

Among stricter measures in China, banks now require customers purchasing foreign currency to specify how they will use the funds and have been reminding individuals about restrictions on overseas property investment.

Economists expect forceful policing of capital controls this year, though China's financial system is notoriously porous, with speculators often able to find new ways to get money out.

Yu Runze, the chief strategy officer for the development, told Reuters last month that the project was seeking to decrease its reliance on Chinese buyers, and expand efforts in other countries, including in the Middle East, India and Indonesia.