New regulations on the funding of overseas subsidiaries will make it easier for more Chinese companies to invest abroad. Meanwhile, a separately-issued rule makes it clear that the government wants investments to be made strategically.
After August 1 2009, when the Circular on Issues Relevant to Foreign Exchange Control on Granting of Overseas Loans by Enterprises in China (关于境内企业境外放款外汇管理有关问题的通知) issued by the State Administration of Foreign Exchange (Safe) takes effect, Chinese companies will be able to lend up to 30% of their equity to their overseas subsidiaries for use as debt capital.
“The Circular was published at a very critical moment,” said Zhou Jiaxing, a Hong Kong-based Chinese lawyer.
Although many Chinese companies are eager to invest overseas, the difficulty of borrowing money from local banks means...
Please login or register below to read this article.