* Restrictions aimed at preventing bets on yuan rise
* China already has strict capital controls in place
* Analyst says measures to help ease hot money inflows (Adds details and quotes)
BEIJING, March 30 (Reuters) - Chinese banks must cut their short dollar positions and also reduce their short-term foreign debt holdings, the currency regulator said on Wednesday.
The tightening of existing restrictions is the latest step by China to cut the scope for capital inflows betting on faster yuan appreciation.
In a short statement on its website, the State Administration of Foreign Exchange (SAFE) said it wanted to prevent illegal inflows and protect national financial security.
"SAFE is taking various measures to repel potential speculative inflows and I think the recent steps will definitely show some results," said E Yongjian, an economist at Bank of Communications.
China already has strict controls in place to block speculative inflows and regularly tries to reinforce them, an objective that has become more important in recent months as yuan appreciation has edged up.
"It will also help reduce the foreign exchange purchases, which could ease pressure on the central bank to sterilise in the money market," E Yongjian said.
To keep the yuan from rising too quickly against the dollar, China buys most of the foreign exchange that enters the country and must then mop up -- or sterilise -- the yuan that is created in the process to guard against inflation.
NEW RULES
Under SAFE's new rules, Chinese banks that had dollar-short positions of $2 billion or more as of November 8 must reduce them by 60 percent, SAFE said. Banks with short positions of $2 billion or less must cut these in half.
Banks whose foreign exchange positions are lower than the required minimum amount must gradually increase them to meet the quota requirement before September 30, it said.
It did not spell out the change in foreign debt quotas, but said they would be lowered again after last year's 1.5 percent cut. Short-term foreign debt is seen in part as a bet on yuan appreciation.
Banks must also first check that trade deals are genuine before they make any foreign exchange transaction for their clients, according to the statement.
In another tightening on capital flows, Chinese enterprises must cut their advanced payments from importers and delayed payments to exporters to, respectively, 20 percent of the total foreign exchanges they sold or bought over the past twelve months, the statement added.
The State Administration of Foreign Exchange said its order would go into effect on April 1. (Reporting by Aileen Wang and Simon Rabinovitch; Editing by Ken Wills)