In February 2015, the State Administration of Foreign Exchange (SAFE) released a circular to further simplify and improve foreign exchange control in the direct investment sector, which will take effect from 1 June 2015. By this, SAFE intends to better facilitate the cross-border flow of capital funds.

Foreign investors who are interested in direct investment into China and Chinese investors who are interested in outbound investment should be aware of this new circular, which could streamline their investment procedures.

Measures taken by SAFE include:

• the replacement of SAFE approval with a bank’s registration for foreign exchange in the direct investment sector
• the removal of the requirement for SAFE registration for in-kind contribution made by foreign investors to a foreign direct investment project in China
• the removal of the requirement for SAFE filing for re-investment by offshore companies set up or controlled by onshore investors