CHINA: China FDI using Chinese currency to be allowed

Friday July 8 2011

In connection with the China FDI, it is being reported that Chinese authorities have formalised new rules to allow foreign firms to invest in China using Chinese currency. Under new trial regulations companies are permitted to raise Yuan in Hong Kong`s offshore bond market and then bring the funds to the mainland in order to establish new companies and make acquisitions. This process is subject to strict controls by Beijing. Foreign firms will also be allowed larger stakes in Chinese subsidiaries. However certain industries will remain barred from foreign investment. Approval to take part in the scheme is handled on a case-by-case basis. Approval has already been granted to a small group of companies to move funds that have been raised offshore; these in include McDonald`s Corp. and Caterpillar Inc.

This information will be updated as further details become available.