SAFE Circular 28, issued and effective from 25 October 2019, introduces twelve new measures to facilitate China cross-border trade and investment. This includes the removal of restrictions on foreign invested enterprises (FIEs) from using their registered capital for domestic equity investments. Restrictions previously applied where these were not ‘FIE investment enterprises’ (i.e. FIEs with equity investment as a listed activity in their registered scope of business). The change, which builds on earlier pilot schemes, should facilitate the expansion of foreign business and investment in China.
Since 2008, policies governing FIE use of registered capital for domestic equity investment have evolved:
SAFE Circular 28 now takes the latter treatment for FIE non-investment enterprises nationwide.
Key impacts of Circular 28 for foreign investors include:
A number of additional points are worth noting:
With an overall deepening of reform and opening-up, China is exerting even more efforts to optimize the business environment. KPMG will continue to pay close attention to relevant policies and assist investors with investing and expanding their businesses in China. We can provide the following services: