Safe registration of China round-trip investments

Round-trip investments into China, by offshore investment vehicles that hold assets injected into them by China residents, can now obtain currency control registration through simplified procedures, independently of any fundraising that such vehicles may implement in the future. Previously non-compliant injections, investments and fundraising will be easier to bring into compliance, and participants will be under increasing pressure to accept the costs of doing so.

These changes will effectively end a period of six years in which circulars of the China State Administration of Foreign Exchange (Safe) subjected round-trip investments to deep and broad scrutiny, which overlapped unpredictably with the actions and inactions of other regulators. Going forward, Safe, by narrowing and separating its review of applications to register round-trip investment vehicles and their offshore fundraising, can better focus on its increasingly complex and difficult core mission of monitoring, calculating and regulating currency conversions and cross-border remittances.