The first article examines eased foreign investment restrictions in telecom services. The gist of the amendment is that the registered capital requirement has been halved for both national telecom services and intra-regional services, from RMB 2 billion to RMB 1 billion, and RMB 200 million to RMB 100 million, respectively. The amendment is available here.
The second article examines Circular 142 issued by the State Administration of Foreign Exchange. The Circular includes new regulations for currency exchange in an effort to better control the inflow of hot money into China. The scope is large, and the authors do a fine job of breaking the regulation down. Of particular interest:
Like many of SAFE’s other regulations, Circular 142 is broadly drafted, making it difficult to predict how local SAFE branches will interpret and enforce certain provisions of Circular 142.The authors conclude that in the wake of this circular, foreign investors need "to evaluate currency exchange issues carefully. Particular attention should be given to investments by foreign invested holding companies and FIVCEs, as well as domestic realestate investments and M&A transactions. The major changes for FIVCEs include the requirement that they seek SAFE approval before making an investment, and new concerns about repatriating capital if approval is not received. Circular 142 is available at the SAFE website, here.
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