20 September 2018
It will soon be easier for affluent Chinese to invest directly in financial and real estate assets abroad. Photo:
It will soon be easier for affluent Chinese to invest directly in financial and real estate assets abroad. Photo:

China to make it easier to invest overseas

China plans to make it easier for individuals and companies to invest overseas as it pushes to turn the renminbi into a global currency, The Wall Street Journal reported.

The State Council is expected to announce within the next few weeks that individual Chinese and businesses will be able to directly buy stocks, bonds and real estate in foreign markets, removing limits on such transactions, the newspaper said, citing unnamed Chinese officials.

Though initially limited to people and businesses in designated free-trade zones, the plan may be scaled up over time, the officials said.

Efforts to relax capital controls have become urgent as Beijing is trying to get the renminbi declared an official reserve currency by the International Monetary Fund later this year.

The government’s moves — including agreeing currency swap deals with other countries and opening stock-trading channels with Hong Kong — advance China’s long-stated goal of allowing investors and businesses to move money in and out of the country freely.

Although China already permits cross-border flows of its currency for foreign trade and investment in factories, the government heavily restricts funds entering and leaving the country for financial investments like stocks and bonds.

The latest initiative targets restrictions on financial transactions by companies and the US$50,000 annual limit on individual Chinese moving money out of the country.

For years, many Chinese citizens have tried various ways, some illegal, to evade the limit. Providing legal channels for overseas investments allows the government to better monitor risks, the report said.

The plan broadens the channels for outbound investment by allowing individuals who meet certain criteria to invest in foreign securities and other assets on their own, as opposed to having to go through approved asset managers, the officials said.

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