MOFCOM regulates cross-border RMB direct investment projects

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Renminbi

On 12 October, the Ministry of Commerce published its Issues Regarding Cross-border Renminbi Direct Investment Notice (Shang Zi Han [2011] No. 889) to govern various matters in connection with the use of the renminbi in cross-border direct investment.

The Notice governs the use of renminbi which is derived lawfully from overseas by foreign investors, while the use of renminbi derived lawfully from inside China continues to be governed by relevant regulations currently in force.

The Notice sets out several scenarios where foreign investors derive “offshore renminbi”:

  • renminbi which is derived from the use of renminbi as the settlement currency for cross-border trade;
  • renminbi profits which are lawfully derived from inside China and remitted out to overseas countries and renminbi which is derived from share transfer, capital reduction, liquidation and early recovery of investment;
  • renminbi which is derived through legal channels overseas (such as the issuance of renminbi-denominated bonds or stocks).

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Business Law Digest is compiled with the assistance of Haiwen & Partners. The authors can be emailed at baochen@haiwen-law.com. Readers should not act on this information without seeking professional legal advice.