SHANGHAI, China -- China is relaxing controls on companies seeking overseas financing in a move meant to boost development of private and high-tech companies, the country's foreign exchange regulator said.
The change in policy will enable mainland Chinese companies to set up offshore companies to raise funds and conduct mergers and acquisitions inside China.
"After a period of fast growth, many private and high-tech companies wishing to expand face capital shortages," the State Administration of Foreign Exchange said in a statement seen Monday on its Web site.
"This will make it more convenient to seek financing in the international capital market," the statement said.
The revised rules, which take effect Nov. 1, require such offshore companies to transfer income back to China within 180 days after it is earned, it said.
The change is also aimed at eliminating a loophole in the regulations that made it difficult for regulators to monitor cross-border capital flows.
Chinese companies have long faced daunting bureaucratic hurdles to issuing stocks and bonds overseas. Many have resorted to illicit transfers of capital to evade such restrictions, local reports said.
China has been seeking to restrict bank lending to help curb excessive investment in property and other areas, with the aim of preventing a financial crisis resulting from spending on redundant, unprofitable projects.
But the curbs also have hit private businesses that already were struggling to get financing in a country where state-owned banks tend to favor government-owned companies.
Source: AP via Seattle Post Intelligencer
Leave a comment