Qianhai Opens Domestic
Equity Investment

Original article published only in Chinese
Below is a machine-translated version

Foreign-invested enterprises may use the foreign exchange income of capital projects for domestic equity investment according to the actual investment scale.
Recently, with the approval of the State Administration of Foreign Exchange, the Shenzhen Foreign Exchange Bureau issued the “Implementation Rules for the Pilot Implementation of the Foreign Exchange Management Reform of the Shenzhen Qianhai Shekou Area in the China (Guangdong) Pilot Free Trade Zone”, and a number of pioneering and pilot policies have been introduced to the former Haishekou.

Trade zone, including capital project foreign exchange fund use, equity investment, cross-border financing and other aspects.
The rules allow foreign exchange income from capital projects to be used for domestic equity investments. Generally, foreign-invested enterprises are no longer subject to high thresholds. As long as they are legally compliant, they can use the foreign exchange income of capital projects or the RMB funds obtained from foreign exchange settlement according to the actual investment scale.
It is worth noting that the “Rules” expand the pilot program for the facilitation of foreign exchange income of capital projects to the entire Qianhai Shekou Free Trade Zone and reduce the threshold for enterprise pilots. Under the premise of true compliance, non-investment foreign-invested enterprises in the region may also use the foreign exchange income of capital projects or the RMB funds obtained from foreign exchange settlement for domestic equity investment according to the actual investment scale. As long as there is no foreign exchange administrative penalty record for nearly one year, and in the foreign exchange income list of goods trade, and the goods trade is classified into category A enterprises, the above qualifications are met.
It is reported that the latest round of Qianhai foreign exchange management reform pilot policy is mainly reflected in: allowing the implementation of pilot projects for the payment of foreign exchange income of capital projects in the region, allowing ordinary foreign-invested enterprises in the region to carry out domestic equity investment, allowing the region to determine the choice of “betting”. Enterprises with borrowing foreign debts are adjusted to the macro-prudential management model for cross-border financing; the regional restrictions on foreign exchange registration of domestic direct investment in enterprises in the region are relaxed, and the cross-border financing contracting currency, withdrawal currency and repayment currency of enterprises in the region are relaxed. Sexual requirements only require that the withdrawal and repayment of the currency be consistent; the foreign debt cancellation of the enterprise in the zone shall be handled by the decentralized bank.
In the future, Qianhai will continue to play the strategic advantage of pioneering and piloting, promote financial innovation and serve the real economy.