SAFE Expands Registration-Free Policy for Foreign-Funded Enterprises' Domestic Reinvestment Nationwide

The State Administration of Foreign Exchange (SAFE) has issued the Notice on Deepening Reform of Foreign Exchange Management for Cross-Border Investment and Financing (Draft for Comment) to further enhance cross-border investment and financing convenience, improve the business environment, and support high-quality development. The Notice introduces nine policy measures across three areas: investment, financing, and payment facilitation.

On the investment front, the Notice announces the nationwide expansion of the registration-free policy for domestic reinvestment by foreign-funded enterprises, which had previously been piloted in selected regions. Since 2022, SAFE has conducted pilot programs in 12 areas, including Shanghai, Jiangsu, and Guangdong, later expanding to Tianjin, Anhui, Shandong (including Qingdao), Hubei, and Sichuan. The new policy supports broader implementation across the country.

At a June 13 press conference, Li Yongjie, Deputy Representative for International Trade Negotiations at the Ministry of Commerce, stated that the ministry will further ease market access, develop policies to support domestic reinvestment by foreign-funded enterprises, and guide investment toward emerging and future industries. The Notice also allows profits under direct foreign investment in foreign exchange to be reinvested domestically and extends the pilot policy of accepting foreign funds by domestic non-enterprise research institutions (“Ke Huitong”) nationwide.
In terms of financing, the Notice introduces two key measures to support high-tech enterprises. First, the external debt facilitation quota is uniformly raised to the equivalent of USD 10 million for high-tech, “specialized, refined, distinctive, and innovative,” and tech-based SMEs. For enterprises identified through the “innovation points system,” the quota is increased to USD 20 million.

Second, participants in cross-border financing facilitation may be exempt from submitting audited financial reports at the contract registration stage. On the payment side, the Notice shortens the negative list for capital account income use, lifting the restriction on using foreign exchange income and its RMB conversion to purchase non-self-use residential property. SAFE emphasized that this measure was initially introduced during a period of real estate overheating and included complementary restrictions to limit non-real estate firms from using such funds for property investments.

Additionally, the Notice optimizes procedures for capital account foreign exchange income by allowing banks to independently determine the scope and frequency of post-event checks based on customer risk profiles and compliance history. It also expands the pilot policy allowing Hong Kong and Macao residents to settle and pay for property purchases in the Greater Bay Area to all qualified overseas individuals nationwide. Those meeting local home purchase policies may settle and pay with a purchase contract or agreement, submitting the official home purchase registration certificate to banks afterward.