Beijing Eases Foreign-Exchange Regulations on FDI Projects in Trade Zone

Beijing has relaxed rules on foreign currency conversions for foreign direct investment (FDI) in the Shanghai free-trade zone and is allowing multinational companies to establish foreign exchange asset pools inside the zone.


Shanghai launched the free trade project in September as Premier Li Keqiang hoped to use the 28.78 square kilometre zone as a testing ground for economic reforms.


The South China Morning Post reports that investors with bank accounts in the zone may now do conversions between yuan and foreign currencies whenever they want.


Foreign investors may now also park foreign currencies in advance in the free-trade zone before clarifying the use for the money as further direct investments on the mainland.


Under previous regulations, FDI projects cannot be pursued unless the State Administration of Foreign Exchange (SAFE) approves the exchange of foreign currencies into yuan before using them to set up production facilities or buy local assets.


The investors are required to state clearly the use of the funds and the exact amount of investment into each of the FDI projects before going through the SAFE's review procedure.




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