China forex regulator calls for greater oversight of overseas entities, but avoid ‘US-style financial hegemony’
- China’s foreign exchange regulator says the government should establish legislation to ‘moderately expand’ extraterritorial jurisdiction
- But China ‘must avoid US-style financial unilateralism’, embrace multilateral cooperation and focus on Chinese firms overseas
China should prepare itself to take regulatory action overseas to protect its financial interests, but enforcement should be targeted so it does not mimic US long-arm jurisdiction that imposes legal standards on foreign entities, says a new report by the country’s foreign exchange regulator.
Instead of following the United States, China should embrace multilateral or bilateral regulatory cooperation and focus on oversight of Chinese businesses and individuals in foreign countries, the State Administration of Foreign Exchange (SAFE) said.
“Legislation to moderately expand the extraterritorial jurisdiction of laws is significant to protect sovereign interests,” SAFE researcher Liu Xu wrote in an article published on Tuesday in China Forex magazine, which the administration controls.
“We should adopt its reasonable parts, but must avoid the US-style financial hegemony or unilateralism.”
The recommendation comes at a delicate time for China as it attempts to improve relations with the Biden administration, but remains wary of Washington’s efforts to contain it financially.