PBOC shows greater renminbi flexibility
(8 January 2018 – China) China’s central bank has announced a raft of new measures intended to increase investment and trade in the countries currency.
Included in the policy update from the People’s Bank of China (PBOC), was news that corporates will be able to pull their renminbi profits out of the country China without restriction.
“The profits of overseas investors are assured to be freely remitted in accordance with the law”, the PBOC said. However, this would only happen after regulators reviewed “the related supporting documents".
The notice also said it would allow individuals to remit income from China overseas and vice-versa, as well as allowing Chinese companies to bring offshore renminbi funds back to China.
The new policy removes restrictions on account opening and the use of the funds and, the PBoC says, has "thus further optimised the business handling process for overseas corporates".
The central bank made four major changes in facilitating foreign investors to make direct investment in renminbi.
If a foreign investor establishes several enterprises or projects in China, it may separately set up renminbi deposit accounts for each of these projects to pay out initial expenses. By contrast, the previous requirement was that each overseas investor could only open one account of this kind.
A foreign-invested enterprise may open a special deposit account for renminbi capital funds in a different city from the one in which it is registered. It may open a plurality of such accounts and funds can be transferred between these accounts if they are under the same name. In the past, only one such account could be opened and only in the place where the enterprise was registered.
Banks may handle payment procedures directly in areas such as wages, travel expenses and sporadic purchases, according to payment instructions from the foreign-invested enterprise. Going forward, no higher-level approval will be required, simplifying business procedures.
If the overseas investors participate in the transfer of the state-owned property of domestic enterprises in renminbi, and if the transaction is completed, the renminbi guarantee money can be used as payment for the transaction and for the subsequent establishment of a foreign-invested enterprise. If the transaction is unsuccessful, the renminbi deposit will be returned the same way.
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