A Chinese security guard stands in front of an advertisement of a joint Shanghai Pudong Development Bank-Citigroup credit card in the financial hub of Shanghai February 4, 2004. Reuters Starting in September, Chinese banks will be required to report any overseas credit card transactions over 1,000 yuan, that's $147. This includes, but is not limited to, credit cards, debit cards, and cash withdrawals.

The banks will report that data to the State Administration of Foreign Exchange (SAFE) daily.

This a reminder that, though China has been quiet, all is not well. Officials are doing this because downward pressure on the yuan has been spurring capital outflows. Last month the People's Bank of China recoupled the yuan to the dollar to stabilize it.

"Pressure on the Rmb [yuan] has made the authorities more cautious about capital outflow. The need to strengthen the regulatory framework has also led to a step-up in the crackdown of illegal FX [foreign exchange] activities by SAFE," wrote analysts at CLSA.

This is also an attempt to crackdown on the purchase of financial products as the government tries in earnest to reform its financial system.

For example (from CLSA):

"In insurance, Mainland Chinese have been active in buying policies from insurers in Hong Kong. While authorities have reiterated they should not buy investment type products and UnionPay has banned such transactions, the Hong Kong insurance industry has found a loophole in Visa and MasterCards issued by Mainland banks," the analysts wrote. "However, now that all cards issued in China are subject to the reporting requirement, it gives a means to the regulators to detect violations in the purchase of financial products should they decide to go after these illegal activities."

Naturally, these two issues are connected. Ever since China announced that it would finally start cracking down on wealth management products, shadow banking, and all of the other messy debt in its financial system, analysts have been afraid of a liquidity crunch. It's part of the reason why Moody's downgraded China's credit rating last month.

In 2016, Chinese citizens spent $120 billion overseas, so this measure will likely have an impact on retailers, especially on the high end. This isn't to say that having to report foreign purchases will stop people from making them, but it certainly will make people think twice about conducting suspicious behavior or outright illegal activity.

Expect the Federal Reserve to watch this carefully. We learned last year that if China pukes, the whole world can get sick. And as recently as January, Fed Chair Janet Yellen said she was worried about China's financial system.