Direct investment overseas by citizens may be allowed: forex regulator
The mainland may allow individuals to invest directly overseas, as the holder of the world's biggest foreign exchange reserves tries to ease pressure for yuan appreciation, a regulator said yesterday.
Deng Xianhong , deputy head of the State Administration of Foreign Exchange, said on the central government's website that Beijing would further relax controls over individual capital accounts.
'We are researching possibilities for individual outbound direct investment, but exactly when mainlanders will be allowed to do so depends on the development of our research and the quality of our supervision,' Mr Deng said.
Mainland individuals are permitted to invest abroad only through licensed funds run by banks and brokerages. The mainland's foreign exchange reserves have swelled to a record US$1.33 trillion, encouraging the government to consider loosening capital controls aimed at safeguarding financial stability.
The central government made it easier for individuals to convert the yuan into foreign currencies with the introduction on February 1 of rules simplifying procedures. It also raised the amount of foreign currency that an individual could buy in one year from US$20,000 to US$50,000.
Mr Deng said the value of individual foreign currency purchases rose 259 per cent year on year between February and June, while sales rose 31 per cent. The raised cap was also a blow to illegal foreign currency vendors, he said. On expatriates buying property on the mainland, Mr Deng also explained the requirements involved. Beijing restricted foreign nationals to buying one residential property in July last year in an attempt to rein in the overheated real estate market.
Foreigners can qualify only if they have worked or studied on the mainland for more than one year.
But four kinds of documents were needed before the money could be deposited into the developer's bank account, Mr Deng said: a property sale or advance sale contract; a passport or mainland entry permit for people from Hong Kong, Macau and Taiwan; registration papers for an advance sale contract; and an employment contract or a student status certificate.