SAFE Issues Circular to Further Liberalize Cross-border Trade

On 23 October 2019, the State Administration of Foreign Exchange of China (SAFE) issued the Circular on Further Promoting the Facilitation of Cross-border Trade and Investment (Hui Fa [2019] No.28) (([2019]28 , the "Circular"). 
The Circular aims to further liberalize and streamline the foreign exchange control over cross-border investments and trades. Measures are introduced to simplify the foreign exchange control requirements under both current account and capital account items, and more importantly, relax the long-standing domestic equity investment restriction imposed on foreign-invested enterprises (FIEs).
The following key points we conclude are for your information:
I. Relaxation on Equity Investment by FIEs
Non-investment FIEs are allowed to make domestic equity investment with their capital funds in accordance with the law on the premise that the existing special administrative measures (negative list) for foreign investment access are not violated and the projects invested thereby in China are true and compliant with the PRC law.
II. Simplification on Foreign Debt Formalities
The requirement that PRC non-financial companies (debtors) shall complete foreign debt deregistration with the local foreign exchange authorities is cancelled. The Circular now permits PRC non-financial companies to deregister their foreign debt transactions directly at their banks without time limit.
III. Simplification on Payments under Cross-border Trade
In addition to the Guangdong-Hong Kong-Macao Greater Bay Area, Shanghai and Zhejiang, the pilot program to facilitate foreign exchange receipts and payments for trade in goods is expanded to other regions. The documentary and reporting requirements in relation to the receipts and payments under cross-border trade are further simplified.
IV. Bank Accounts for Overseas Construction Projects
PRC contractors engaging in overseas construction projects, after completing the registration with the local foreign exchange authorities, are now permitted to open an overseas account for the centralized management of the funds and payments involved under the projects. Such account shall be in compliance with the laws and regulations of the country (or region) where it is opened.

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