Ministry of Commerce, Circular on Issues Relevant to Cross-border Direct Investment in Renminbi

商务部关于跨境人民币直接投资有关问题的通知

November 08, 2011 | BY

clpstaff &clp articles &

FDI in Rmb officially allowed.

Clp Reference: 2300/11.10.12 Promulgated: 2011-10-12 Effective: 2011-10-12

Issued: October 12 2011
Effective: as of date of issuance

Applicability: The phrase “cross-border direct investment in renminbi” means the activity whereby a foreign investor invests directly in China according to law with lawfully-obtained offshore renminbi (Article 1). The term “offshore renminbi” means: renminbi that a foreign investor has obtained through cross-border trade settlement as well as renminbi lawfully obtained in China as profit or as the result of an equity transfer, capital reduction, liquidation or early recovery of investment and remitted abroad; and renminbi obtained abroad by a foreign investor through legal means such as renminbi-denominated bonds issued abroad and renminbi-denominated shares issued abroad (Article 2).

This Circular shall also apply to cross-border direct investments in renminbi by investors from Taiwan, Macao and Hong Kong (Article 14). In the event of a discrepancy between this Circular and previous provisions of the Ministry of Commerce (Mofcom) on cross-border direct investment in renminbi, this Circular shall prevail (Article 16).

Main contents: Cross-border direct investment in renminbi may not be directly or indirectly used in China to invest in negotiable securities or financial derivatives or used to make entrusted loans (Article 4). Cross-border direct investments in renminbi in the following circumstances shall be submitted to Mofcom for review: the amount of the capital contribution in renminbi is Rmb300 million or more; it is in the financing security, lease financing, micro-credit or auctioning industry; it is in a foreign-invested company with an investment nature or foreign-invested venture investment or equity investment enterprise; it is in an industry subject to macroeconomic control by the state, such as cement, iron and steel, electrolytic aluminum or shipbuilding; or it is a private placement of shares or a transfer by agreement of shares of a listed company in China (Articles 6 and 11).

clp reference:2300/11.10.12prc reference:商资函 [2011] 第889号promulgated:2011-10-12effective:2011-10-12

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