Foreign exchange restrictions continue to be a challenge for
international businesses that invest in a subsidiary in China.
Approvals are necessary for just about every kind of transaction,
from confirming the investment amount (registered capital) to
contributions, to converting the foreign exchange to local currency
for use in China and repatriating dividends. Foreign exchange
restrictions add a level of complexity to foreign direct investment
(FDI), and occasionally create serious challenges to a chosen
business model or implementation strategy.
To encourage and facilitate FDI, the department in charge of
foreign exchange - the State Administration for Foreign Exchange
(SAFE) - as introduced new rules in the form of the
"Circular on Issues Concerning Further Improvements and
Adjustments of Administration Policies of Directly Invested Foreign
Exchange", which will take effect on 17 December 2012.
After summarizing the general contents of the Circular, we
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