BEIJING, June 9 (Reuters) - China's foreign exchange regulator on Tuesday said it would launch more supportive rules to facilitate overseas investment by Chinese companies.
The State Administration of Foreign Exchange said it would allow qualified Chinese companies to use their retained capital, either denominated in yuan or foreign currencies, to buy forex to fund overseas subsidiaries.
Chinese companies were already allowed to use their retained capital to support overseas operations, but the new rules appear to be part of a push to simplify approval procedures for outbound investment and to encourage more companies to look abroad.
SAFE said at a press conference that the new rules would take effect on August 1.
China has ample cash on hand to support overseas investment, with $2.9 trillion in foreign financial assets, including both official forex reserves and private holdings, at the end of 2009.
China's outbound investment has been very tepid compared with inflows from foreign investors, but the pace has started to pick up, nearly doubling to $52.2 billion in 2008 from $26.5 billion in 2007.
The government's easing of outbound investment rules is only
one part of the equation, as Chinese companies have run into
obstacles on several major investment attempts. Just last week
global miner Rio Tinto