In order to carry out the six policy measures of the State Council for further stabilizing external demand, increasing the efficiency of fund use by domestic enterprises, and supporting the go global move of enterprises of diverse ownerships to stimulate exports, and based on the earnest efforts of drawing from previous experience in the trial reform for providing overseas lending, the SAFE recently issued the Circular on Related Issues Regarding Foreign Exchange Administration of Overseas Lending Granted by Domestic Enterprises (hereinafter referred to as the Circular). The Circular will take effect as of August 1, 2009.
The content of the Circular mainly consists of the following: First, the scope of the lenders for overseas loans is expanded from the qualified Chinese and foreign-funded transnational companies currently in force to qualified enterprises of diverse ownerships. Second, the fund sources for overseas lending are expanded. Domestic enterprises are allowed to provide overseas lending through the use of diverse forms of fund sources within certain limitations, such as self-owned foreign exchange and foreign exchange purchased with the home currency. Third, the ratification and exchange procedures for overseas lending are streamlined. Matters concerning the opening of special foreign exchange accounts for overseas lending, fund transfers within China, and the purchase of foreign exchange etc. will all be directly handled by the designated foreign exchange banks. Fourth, the statistical monitoring and risk prevention mechanism for overseas lending has been improved. The administrative system for ratification of the qualifications and quota for overseas lending has been perfected, the valid term for overseas lending has been clarified, and a sound statistical monitoring mechanism for the inflows and outflows of foreign exchange funds for overseas lending has been established.
Implementation of the Circular will facilitate efforts by domestic enterprises to take full advantage of two markets, two sources of funds, enhancing international economic and technological cooperation,  and to ease enterprise financing difficulties in making direct overseas investments due to insufficient liquid funds, and will bolster the go-globalefforts of enterprises of diverse ownerships as a way to stimulate exports and further promote the development and expansion of enterprises making direct investments abroad. (End)