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CHINESE companies seeking outbound projects and Australian companies looking to secure Chinese outbound investment need to be aware of changes in the rules applying to foreign exchange remittances as these could impact their deal structures and timing, according to foreign investment experts from MinterEllison.
Partners Chris Carr and Bi Chen have highlighted the measures to tighten up the country's foreign exchange regulations, taken by China's central bank, the People's Bank of China (PBOC), in response to market anticipation of the depreciation of the country's currency, the Renminbi.
"In particular, funds sourced within mainland China for outbound transactions will be subject to additional scrutiny and discretionary approval of the State Administration of Foreign Exchange ("SAFE") or its local branches."
She notes that in bringing in these measures, Chinese regulators have reiterated that China will continue to uphold its "Going Global" strategy, thus encouraging Chinese companies to participate in international markets.
"However, we do expect that outbound investments by Chinese companies will slow in the first half of 2017 as these measures, their application by the relevant regulators, and their practical implications are further understood by the market."
"It's significant that China is tightening its FX regulations and we recommend that both Chinese investors and their Australian counterparts closely monitor developments," says Carr.
Business News Australia
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