Policy to drive rebound of foreign equity investment

An action plan was recently released by the State Council, China's Cabinet, aimed at further opening up to foreign investors and stabilizing foreign investment this year.

The plan outlines measures to encourage foreign investors' strategic shareholding in Chinese listed companies, facilitate their participation in mergers and acquisitions, and accommodate the establishment of foreign investment companies while lifting restrictions on their use of domestic loans.

A view of Futian District. Photo from Dute News

According to the action plan, foreign investment companies will be allowed to use domestic loans for equity investments in China.

The plan also arranges steps to encourage multinational corporations to establish investment companies in China, providing convenience in terms of foreign exchange management, cross-border data transfer and personnel movement.

The revised rules on foreign investors' strategic investment in listed companies, which were unveiled in November, allow strategic investment through tender offers and ease restrictions on cross-border share-for-share exchanges — both common in global transactions.

The action plan also promises to optimize the provisions for foreign investors acquiring domestic companies, lowering the barriers for them to conduct cross-border share-for-share exchanges in mergers and acquisitions. (China Daily)