Foreign exchange rules further simplified for foreign direct investment in China

By John Shi, Amber Tang and David Xu

On 11 May 2013, the State Administration of Foreign Exchange (SAFE) of the People’s Republic of China (PRC) released the Provisions on Foreign Exchange Administration of Inbound Direct Investment by Foreign Investors (SAFE Circular 21), which entered into effect on 13 May 2013. This is another important piece of SAFE regulation related to foreign direct investment (FDI) in China. It’s a further step to simplify and streamline foreign exchange administration regimes. It cancelled 24 FDI-related foreign exchange regulations. The attached Operating Guidelines and Specifications on Matters Relating to Inbound Direct Investment Business provide detailed instructions.

Article 3 of SAFE Circular 21 expressly provides that foreign exchange matters of FDI activities are only subject to registration regime (in contrast with the verification-oriented regime prior to SAFE Circular 59 1). Similar to SAFE Circular 59, SAFE Circular 21 abolishes various SAFE approval/verification requirements on foreign exchange procedures and lists out the matters requiring SAFE registration in a more streamlined and unified way…

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