SAFE Policy Update

On 26 January 2017, the State Administration of Foreign Exchange (the "SAFE") issued the Notice on Further Promotion of Foreign Exchange Administration Reform and Improvement of the Authenticity and Compliance Review (the "Notice"). The Notice is aimed at relaxing certain foreign exchange inflow controls and strengthening the authenticity and compliance reviews for capital outflows carried out by China's designated foreign exchange banks. The key measures in the Notice include but not limited to (1) permitting funds under Nei Bao Wai Dai (an arrangement under which a borrower can obtain loans outside China using the domestic assets of its Chinese affiliate(s) as security) to be transferred back to China and used domestically, (2) permitting foreign institutions in the free trade zones to use offshore funds domestically after settlement of exchange and (3) requiring domestic entities that plan to make direct investments overseas to submit various supporting documents to