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)
