Rules relaxed for foreign investors
By Feng Jianmin |
November 22, 2012, Thursday
|
Print Edition
Print Edition
CHINA is to drop a number of regulatory requirements for foreign investors to make cross-border capital flow easier after this year's decline in foreign direct investment.
Starting Decmber 17, foreign investors, once they've finished necessary paperwork, will no longer be required to obtain approval for opening bank accounts, remitting profits abroad and transferring money between different domestic accounts, the State Administration of Foreign Exchange said on its website.
"The new measures are intended to make investment easier," the foreign exchange watchdog said.
Yesterday's announcement came a day after Ministry of Commerce data showed that foreign direct investment in China fell in October for the 11th time in 12 months, with inflows in the first 10 months of the year down 3.5 percent. That compares with increases of 9.7 percent in 2011 and 17.5 percent in 2010 during the same period.
The central bank said recently that China's banking system bought a net 21.6 billion yuan worth (US$3.4 billion) of foreign exchange in October, down sharply from a net purchase of 130.7 billion yuan in September, indicating weaker capital inflow despite the yuan's recent appreciation.
Economists said new foreign investment rules may help to encourage long-term capital inflows to China, but foreign investors would remain cautious in the short-term.
"The measures are consistent with China's pledges to loosen its grip on foreign exchange," said Zhou Hao, an economist with Australia & New Zealand Banking Group. "But foreign investment is not usually driven by policies and will still depend mainly on economic situations."
In a separate statement, the foreign exchange administration said the pressure of speculative money inflow remained low even though investors were becoming more optimistic about China's economic outlook.
The spot price of the yuan against the US dollar rose to a record 6.2262 on November 13.
"Market worries about capital outflow and depreciation of the yuan have ebbed on massive stimulus policies by developed countries, accelerating exports and signs of recovery in China's economy," the statement said. "Major developed economies' abundant liquidity and low interest rates will trigger capital inflows to China ... but the effects are not obvious."
Unclear outlook
Expectations for the yuan's depreciation still linger on the offshore market, and international investors' enthusiasm over placing money in China is still dampened by an unclear economic outlook and a lower appetite for risk, the SAFE said.
Domestic companies have also reduced borrowing from foreign banks, causing a decrease in capital inflow, after domestic lenders cut lending rates of foreign currencies in the second half of this year.
The SAFE data showed that Chinese banks in October bought US$125 billion of foreign currency from their clients and sold US$117.2 billion.
But Chinese banks were net sellers of US$600 million in the forwards market, indicating market speculation for a weaker yuan in the long-term.
Starting Decmber 17, foreign investors, once they've finished necessary paperwork, will no longer be required to obtain approval for opening bank accounts, remitting profits abroad and transferring money between different domestic accounts, the State Administration of Foreign Exchange said on its website.
"The new measures are intended to make investment easier," the foreign exchange watchdog said.
Yesterday's announcement came a day after Ministry of Commerce data showed that foreign direct investment in China fell in October for the 11th time in 12 months, with inflows in the first 10 months of the year down 3.5 percent. That compares with increases of 9.7 percent in 2011 and 17.5 percent in 2010 during the same period.
The central bank said recently that China's banking system bought a net 21.6 billion yuan worth (US$3.4 billion) of foreign exchange in October, down sharply from a net purchase of 130.7 billion yuan in September, indicating weaker capital inflow despite the yuan's recent appreciation.
Economists said new foreign investment rules may help to encourage long-term capital inflows to China, but foreign investors would remain cautious in the short-term.
"The measures are consistent with China's pledges to loosen its grip on foreign exchange," said Zhou Hao, an economist with Australia & New Zealand Banking Group. "But foreign investment is not usually driven by policies and will still depend mainly on economic situations."
In a separate statement, the foreign exchange administration said the pressure of speculative money inflow remained low even though investors were becoming more optimistic about China's economic outlook.
The spot price of the yuan against the US dollar rose to a record 6.2262 on November 13.
"Market worries about capital outflow and depreciation of the yuan have ebbed on massive stimulus policies by developed countries, accelerating exports and signs of recovery in China's economy," the statement said. "Major developed economies' abundant liquidity and low interest rates will trigger capital inflows to China ... but the effects are not obvious."
Unclear outlook
Expectations for the yuan's depreciation still linger on the offshore market, and international investors' enthusiasm over placing money in China is still dampened by an unclear economic outlook and a lower appetite for risk, the SAFE said.
Domestic companies have also reduced borrowing from foreign banks, causing a decrease in capital inflow, after domestic lenders cut lending rates of foreign currencies in the second half of this year.
The SAFE data showed that Chinese banks in October bought US$125 billion of foreign currency from their clients and sold US$117.2 billion.
But Chinese banks were net sellers of US$600 million in the forwards market, indicating market speculation for a weaker yuan in the long-term.
- About Us
- |
- Terms of Use
- |
-
RSS - |
- Privacy Policy
- |
- Contact Us
- |
- Shanghai Call Center: 962288
- |
- Tip-off hotline: 52920043
- 沪ICP证：沪ICP备05050403号-1
- |
- 互联网新闻信息服务许可证：31120180004
- |
- 网络视听许可证：0909346
- |
- 广播电视节目制作许可证：沪字第354号
- |
- 增值电信业务经营许可证：沪B2-20120012
Copyright © 1999- Shanghai Daily. All rights reserved.Preferably viewed with Internet Explorer 8 or newer browsers.
