China alert - Issue 25, December 2012
On the 19th of November, 2012, the State Administration of Foreign Exchange ("SAFE") announced the circular “Further Adjustments to Measures for the Administration of Foreign Exchange for Direct Investment” (“Circular 59”). Generally, Circular 59 is for the purpose of simplifying administrative procedures, increasing efficiency, cutting costs and improving the domestic investment environment. However, although control measures have been changed from approvals to registration, enterprises must still provide relevant documents for registration purposes. In other words, there is no substantive change in terms of foreign exchange ("forex") control on direct investment. Moreover, banks will undertake more responsibilities for documentation review, business data and information reporting. Enterprises may spend more time dealing with banks whose risk control is relatively weak or who are conservative in this regard.