New Regulatory Changes In The PRC Regarding Foreign Security Given By Chinese Institutions

On 30 July 2010, SAFE issued a Notice Concerning the Administration of Foreign Security Provided by Chinese Institutions (the 2010 SAFE Notice) which introduced significant changes to the existing regulatory regime governing foreign security granted by Chinese institutions.

Under the 2010 SAFE Notice, foreign security is defined to include foreign security of a financing nature ¹ (financing foreign security) and foreign security of a non-financing nature ² (non-financing foreign security), which are treated differently. Chinese institutions are classified as banks, non-bank financial institutions and ordinary enterprises³ , with each subject to different rules.

By contrast with the old regime, banks are now granted much more autonomy and flexibility to provide both financing foreign security and non-financing foreign security. Non-bank financial institutions and ordinary enterprises are still subject to a case-by-case approval from SAFE when providing foreign