Economic
News relating to
Property and Construction Market -
China is going to try allowing larger scale
of personal foreign investment outside China from certain cities -
China's large pool of private capital, reportedly in hundreds of
billions of yuan, is looking for suitable investment outlets including
those outside China
It
is reported that a proposal for ※financial reform§ which includes
relaxing control of Chinese personal foreign investment outside China
is being considered by China's State Council. If approved, a
trial run of the ※financial reform§ will be conducted in different
Chinese cities. Different combinations of ※financial reform§ have
recently been proposed or announced for Shanghai, Tianjin, Wenzhou,
Quanzhou and Pearl River Delta (Shenzhen, Zhuhai, Guangzhou,
Nansha).
News about the proposed ※financial reform§ was released on Friday
2.12.2012. A newly drafted implementation framework for managing
Chinese personal foreign investment outside China was introduced.
Issues of personal cross-border Reminbi (RMB) transaction includes
personal RMB remittance, personal foreign investment, financing of
personal foreign investment, settlement of currency exchange and
control of personal investment in foreign financial markets.
According to China's present foreign exchange control, Chinese personal
foreign investment outside China is limited to US$50,000 per
year. The proposed ※financial reform§ includes relaxation of such
control. It may also allow the use of domestic local asset within
China as collateral to raise funding in foreign currency for personal
foreign investment.
It is understood that the proposed ※financial reform§ includes
allowance for a person to set up new business outside China, to
participate in the ownership or to take control of an existing foreign
enterprise outside China. Under the new control, a person can
invest maximum US$3M per project overseas; if people are grouped, a
group can invest maximum US$10M per project overseas; each person can
invest maximum US$200M overseas per year. The new policy
encourages Chinese personal foreign investment in ※production or
service§ businesses abroad. The policy does not allow
※consumption type§ investment (eg. buying real estate) or investment in
financial products.
The proposed ※financial reform§ policy also includes the following
goals concerning management and support of Chinese personal foreign
investment:
1.Direction of services concerning foreign investment 每 to guide
proactively foreign law-abiding investment; to assist understanding of
foreign security (investment protection) framework, foreign legal
system and business customs for Chinese personal investors; and to
promote concepts of harmonious win-win investment outcome and social
responsibility in foreign countries; to establish and preserve a good
image of Chinese investors in the international market.
2.Provision of financial and taxation support 每 to increase support for
financing Chinese personal foreign investment such as using domestic
asset within China as collateral for financing Chinese personal foreign
investment. China's finance and tax departments to provide financial
support and tax benefit for encouraging Chinese personal foreign
investment outside China.
3.Utilization of foreign based institutions for liaison support 每 to
establish links between governmental and private organisations to build
liaison network to support foreign investment; to guide Chinese
invested or controlled foreign enterprises to strengthen
self-discipline, and to integrate into foreign local community in
harmony. To develop information, consultation and agency services
to provide guidance and information on foreign countries' inbound
investment policy and new business trends.
4.Handling of business conflict and emergency 每 to establish policy and
framework to handle potential business argument, conflict and emergency
situation in foreign countries.
5.Promotion of diversification of foreign investment 每 to guide private
capital to invest in a broader spectrum of businesses overseas and to
participate in healthy international competition and collaboration.
Due to deceleration of China's economy in the past year, there has been
decrease in investment opportunity within China. However,
accumulation of surplus capital in the private sector keeps increasing,
although at a slower rate. This large pool of capital is seeking
suitable investment outlets. It has been reported that just for
Wenzhou City alone, the volume of capital accumulated in the private
sector is estimated to be over RMB 600 billion (US$96 billion +) and is
increasing at a rate of 14% per annum, according to figures released by
the city's finance department. Unofficial figure is reported as
over RMB 800 billion (US$128 billion +) or even RMB 1000 billion
(US$160 billion).
Source: HKEJ -
23.11.2012; CEN - 4.12.2012
China has announced policy earlier in July this year to encourage
Chinese private enterprises to invest outside China. Refer our
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