On September 15, Li Bin, Deputy Administrator and Spokesperson of the State Administration of Foreign Exchange (SAFE), stated during a press conference regarding the "Notice on Deepening Cross-border Investment and Financing Foreign Exchange Management Reform" that in recent years, domestic real estate market conditions have undergone changes, and macro-control measures related to the real estate industry have been optimized and adjusted. Based on this, relevant foreign exchange management measures need to be optimized and adjusted to adapt to new circumstances and requirements, helping support steady development of the real estate market.
Li Bin mentioned that the current negative list for domestic payment and use of capital project foreign exchange income and RMB proceeds from settlement includes restrictions on purchasing non-self-use residential properties. This policy was implemented when the real estate market was overheated, with various departments successively introducing a series of regulatory policies targeting real estate enterprises and the industry. SAFE, from the perspective of preventing "hot money" speculation, coordinated to introduce measures stipulating that "capital funds and foreign debt of non-real estate enterprises shall not be used for construction or purchase of non-self-use real estate," which played a positive role in the phased stable and healthy development of the real estate market.
**Background of the Notice**
To implement the spirit of the Third Plenary Session of the 20th Central Committee of the Communist Party of China and fulfill the decision-making arrangements of the Central Financial Work Conference regarding the "five major articles" of finance, SAFE has continuously deepened reforms and expanded opening-up following systematic integration and steady, orderly principles. Based on comprehensive research and understanding of opinions and suggestions from banks, enterprises, and individuals regarding foreign direct investment (FDI), cross-border financing, and capital project income payment foreign exchange services, SAFE formulated this Notice to continuously improve cross-border investment and financing facilitation levels, assist in attracting and utilizing foreign capital, and promote high-quality development of financial services for the real economy.
**FDI Foreign Exchange Management Reform Arrangements**
First, elimination of basic information registration for FDI preliminary expenses. When overseas investors need to remit preliminary expenses before establishing FDI enterprises domestically, they can directly open relevant accounts and remit funds.
Second, cancellation of domestic reinvestment registration for FDI enterprises. When FDI enterprises conduct domestic reinvestment with foreign exchange capital and RMB funds from settlement, invested enterprises or equity transferors no longer need to process domestic reinvestment reception registration, and relevant funds can be directly transferred to related accounts. This policy was previously piloted in some provinces and cities with good results, and is now being implemented nationwide.
Third, allowing domestic reinvestment of foreign exchange profits under FDI projects. FDI enterprises' legally generated foreign exchange profits domestically and overseas investors' legally obtained foreign exchange profits can be reinvested domestically.
Fourth, facilitating non-enterprise research institutions' attraction and utilization of foreign capital. Domestic non-enterprise research institutions receiving overseas funds can process relevant registration and exchange procedures with reference to FDI enterprises. This was previously the "Sci-Fi Connect" pilot implemented in some provinces and cities, now extended nationwide.
**Cross-border Financing Foreign Exchange Management Reform Measures**
First, expanding cross-border financing conveniences for sci-tech enterprises. The cross-border financing facilitation quota for high-tech, "specialized, refined, distinctive, and innovative" enterprises and sci-tech SMEs nationwide has been uniformly raised to the equivalent of $10 million USD. For some qualified enterprises selected through the "innovation points system," the cross-border financing facilitation quota has been raised to the equivalent of $20 million USD.
Second, simplifying contract registration management requirements for enterprises participating in cross-border financing facilitation business, no longer requiring relevant enterprises to provide audited financial reports from the previous year or most recent period during contract registration.
**Capital Project Income Payment Conveniences**
First, reducing the negative list for domestic payment and use of capital project foreign exchange income and RMB proceeds from settlement, removing restrictions on purchasing non-self-use residential properties.
Second, optimizing capital project foreign exchange income payment facilitation services. Banks are allowed to independently determine the proportion and frequency of post-event random inspections based on customers' compliance operations and risk levels, enhancing enterprise facilitation service experience and helping optimize the environment for foreign investment in China.
Third, facilitating settlement payments for overseas individuals' domestic property purchases. The convenience measure for Hong Kong and Macao residents' property purchase settlement payments, piloted in the Guangdong-Hong Kong-Macao Greater Bay Area, has been extended nationwide. Overseas individuals who meet real estate authority and local property purchase qualification conditions can process settlement payments for property-related foreign exchange funds at banks with purchase contracts or agreements before obtaining property purchase filing certificates from real estate authorities, and subsequently submit filing certificates to banks.
**Considerations for Reducing the Capital Project Negative List**
The current negative list for domestic payment and use of capital project foreign exchange income and RMB proceeds from settlement includes restrictions on purchasing non-self-use residential properties. This policy was implemented when the real estate market was overheated, with various departments successively introducing regulatory policies targeting real estate enterprises and the industry. SAFE coordinated to introduce measures from the perspective of preventing "hot money" speculation, stipulating that "capital funds and foreign debt of non-real estate enterprises shall not be used for construction or purchase of non-self-use real estate," which played a positive role in the phased stable and healthy development of the real estate market.
In recent years, domestic real estate market conditions have changed, and macro-control measures related to the real estate industry have been optimized and adjusted. Based on this, relevant foreign exchange management measures need to be optimized and adjusted to adapt to new circumstances and requirements, helping support steady development of the real estate market.
**Considerations for Optimizing Overseas Individuals' Domestic Property Purchase Settlement Payment Policy**
Before the Notice was issued, overseas individuals needed to provide property purchase filing certificates issued by real estate authorities when processing settlement payments for domestic property purchases. However, real estate enterprises or second-hand property sellers typically required receiving down payments before processing online contracts. To resolve practical difficulties in business operations, based on in-depth research, SAFE piloted "settle first, supplement later" convenience measures for Hong Kong and Macao residents purchasing properties in mainland cities within the Guangdong-Hong Kong-Macao Greater Bay Area. Purchasers could process settlement payments with purchase contracts or agreements before obtaining property purchase filing certificates from real estate authorities, and subsequently submit filing certificates. The pilot achieved positive responses and results.
To meet the reasonable property purchase needs of more overseas individuals working and living domestically, promote regional integration and talent mobility, SAFE is extending the settlement payment facilitation policy piloted in the Guangdong-Hong Kong-Macao Greater Bay Area nationwide. It should be emphasized that the overseas individuals' domestic property purchase settlement payment convenience is merely an optimization of audit procedures when processing settlement payments at banks and has not changed current overseas individuals' domestic property purchase policies. The prerequisite for enjoying policy conveniences is that overseas individuals meet real estate authority and local property purchase qualification conditions.