Beijing has eased restrictions on Chinese companies seeking to raise funds overseas, after a record monthly decline in China’s foreign exchange reserves in August.
The decision to loosen capital controls on inbound funds stands to boost capital inflows at a time when big domestic stock market losses and the slowing Chinese economy are heightening concerns about capital outflows.
China’s top planning agency, the National Development and Reform Commission, has made it easier for Chinese companies to obtain foreign currency bank loans or issue renminbi bonds with a term of more than one year, according to a statement on its website dated Tuesday.
“The new policy will simplify the process for Chinese entities to issue offshore bonds. It will give Chinese companies flexibility in terms of timing and the amount of bonds issued as long as it is within the approved foreign debt quota,” said Ivan Chung, head of greater China credit research at Moody’s in Hong Kong.
Previously, companies needed approval on a deal-by-deal basis but now they are only required to register with the regulator. “Like Shanghai-HK Stock Connect, it is another step forward in integrating the Chinese financial market with the world,” Mr Chung said.