The foreign exchange authorities introduced 12 new measures to facilitate China cross-border trade and investment.
Huifa  No. 28 was issued by the State Administration of Foreign Exchange (SAFE) in October 2019 and is referred to as SAFE Circular 28. Among the measures in SAFE Circular 28 are provisions to remove restrictions on foreign invested enterprises (FIEs) from using their registered capital for domestic equity investments. The restrictions previously applied when these were not “FIE investment enterprises” (i.e., FIEs with equity investment as a listed activity in their registered scope of business). The change builds on earlier pilot programs and is intended to 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 effectively adopts this treatment and uses substantially similar treatment for FIE non-investment enterprises nationwide.
Implications of SAFE Circular 28 for foreign investors include:
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