China's foreign exchange regulators have allowed Chinese
companies to buy more foreign exchange when investing in overseas
markets.
This move is part of a three-pronged approach to push the
country's "Go Out" policy that aims to encourage the international
expansion of Chinese firms.
First, the State Administration of Foreign Exchange (SAFE) said
on Monday that it has raised the quota of foreign exchange
purchases by Chinese companies investing overseas to a combined
US$5 billion nationwide, up from US$3.3 billion previously.
Second, the policy applies across the country, which is a shift
from the current position that applies to only 24 provinces,
autonomous regions and municipalities.
Third, regional bureaux are now allowed to approve purchases up
to US$10 million. Previously, the bureaux could only approve
purchases worth under US$3 million.
"Through the implementation of these measures, companies will
find it more convenient to go through foreign exchange
administration procedures for their overseas investment, and will
get greater support in utilizing foreign exchange," SAFE said in a
statement.
China is encouraging qualified local companies to enter
international markets as a way to accelerate its integration with
the rest of the world economy. To promote this, regulators have
been loosening control on overseas investments to give companies
more freedom to make their own business decisions.
According to the Ministry of Commerce,
there are currently more than 6,000 non-financial Chinese
businesses operating in overseas markets, half of which are
profitable.
To support their operations in overseas markets, SAFE has been
gradually loosening forex controls, and by the end of last year had
approved a combined investment of US$5.1 billion in 1,152 overseas
projects.
The increasing inflow of forex in recent years, partly boosted
by growing confidence in the Chinese economy, has prompted Chinese
regulators to take a more supportive stance on capital outflow.
(China Daily May 24, 2005)