SAFE Enhances Convenience of Cross-Border Investment and Financing

On September 15, the State Administration of Foreign Exchange (SAFE) issued its “Notice on Deepening Reform of Foreign Exchange Management for Cross-Border Investment and Financing,” introducing measures to streamline foreign direct investment (FDI), cross-border financing in foreign exchange, and capital account income payments. Key provisions permit reinvestment of foreign exchange profits generated under FDI, narrow the negative list governing capital account receipts, and eliminate restrictions on using such funds to acquire non-owner-occupied residential properties.

In the realm of FDI, the Notice abolishes prior registration of preliminary expense information and removes the domestic reinvestment filing requirement for foreign-invested enterprises. What was initially a pilot exemption in select provinces for onshore reinvestment registration will now apply nationwide. The reforms also extend the pilot program that enables non-enterprise research institutions to receive overseas capital—known as “KeHuiTong”—across the country, making it easier for such institutions to attract and deploy foreign investment.

SAFE’s proposals for cross-border financing reform raise the facilitation threshold to USD 10 million for high-tech firms, “specialized, refined, distinctive, and innovative” enterprises, and technology-based small and medium-sized businesses. Eligible companies selected under the “innovation points system” may access up to USD 20 million. Concurrently, SAFE has simplified registration by waiving the requirement to submit audited financial statements during contract registration for participants in cross-border financing facilitation.

The Notice refines policies on capital account income utilization by trimming the negative list and lifting the ban on using such receipts to purchase non-owner-occupied residential real estate. Banks are now empowered to balance service efficiency with risk management by setting their own proportions and frequencies for post-transaction compliance checks, based on each client’s regulatory standing and risk profile.

Regarding foreign individuals purchasing property in China, SAFE allows banks to process foreign exchange settlement and payment upon presentation of a purchase contract or agreement, even before the buyer secures an official real estate filing certificate. The certificate can be provided retrospectively, thus speeding up foreign exchange settlement without altering existing eligibility criteria for overseas buyers.