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Mia Nulimaimaiti

In the latest bid by local-level authorities in China to retain foreign investors and lure more of them to the world’s second-largest economy, Beijing city intends to ease up on strict capital controls and establish a fast-track mechanism to review cross-border data flows.
Foreign investment-related funds will be allowed to freely flow in or out, and without delay, if such transactions are “authentic and compliant [with Chinese regulations]”, according to a draft regulation released by the Beijing Municipal Commerce Bureau on Wednesday.
Meanwhile, the legitimately earned revenue of foreign, Hong Kong, Taiwan and Macau employees, including salaries and other income, would be allowed to be transferred overseas.
China’s foreign investors concerned over tightening grip on national security
City authorities are soliciting public feedback on the proposal until October 20.
“This is needed to expand institutional opening-up … and to create a more transparent, stable and predictable business environment,” the bureau said in an online statement.
The move comes as China is trying to curb an exodus of capital – seen both in equity markets and greenfield investment – amid a slumping domestic economy and rising geopolitical tensions.
But Ding Shuang, chief Greater China economist at Standard Chartered Bank, described the move as “just a reassurance”.
“If China wants to keep or further attract more foreign investment, it needs to give investors more certainty – including more transparent policies and fulfilling the promises it has made in the past,” Ding said.


Foreign businesses have long complained about the uneven playing field in China, and in recent years their list of gripes has grown to include the country’s disruptive Covid controls, China-US tensions and policy uncertainties concerning anti-espionage and data-security laws. Strict capital controls have also long been viewed as an obstacle to investing in China.
January-July foreign direct investment dropped by 9.8 per cent, in US-dollar terms, from a year earlier to US$111.8 billion, according to the Ministry of Commerce.
August also saw the biggest-ever monthly outflow of overseas investment from the A-share market, according to the US-based Institute of International Finance.
The capital city also plans to set up a fast-track mechanism for outbound data and will make a list of data that can flow freely, the draft regulation said.
American fund manager Mark Mobius, a billionaire investor, complained in March that he could not move his money out of China due to its strict capital controls, but China’s forex regulator downplayed the claim.
Negative economic sentiment haunts China’s portfolio inflows, FDI to contract
US firms also reported the lowest optimism over China’s economic prospects because of regulatory uncertainties, deteriorating bilateral relations and escalating geopolitical risks, according to a survey released by the American Chamber of Commerce in Shanghai this week.
China’s top leadership has been stepping up efforts in recent months to win back overseas investors.
Last month, the State Council released a 24-point list of guidelines to attract overseas firms, including issuing business visas and offering tax incentives.
On Monday, China’s central bank met with foreign banks and multinational firms, including JPMorgan, HSBC, Deutsche Bank and Tesla, pledging to optimise policy support.


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China’s capital exodus prompts Beijing city to reassure foreign investors who make ‘authentic and compliant’ transactions

Beijing city authorities have moved to reassure foreign investors that their investment-related funds will be allowed to freely flow in and out of China. Photo: AP

Beijing city authorities have moved to reassure foreign investors that their investment-related funds will be allowed to freely flow in and out of China. Photo: Reuters

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Tesla’s electric vehicles are seen in Shanghai. The company was represented at a meeting on Monday in which Beijing sought to reassure foreign investors that they can still thrive in China. Photo: Getty Images

People’s Bank of China governor Pan Gongsheng has emphasised the need for a “market-oriented” and “law-based” environment in which businesses can thrive. Photo: Reuters

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The European Commission is investigating whether to impose tariffs on Chinese EVs. Illustration: Brian Wang

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Jens Eskelund, president of the EU Chamber of Commerce in China, says a real challenge is whether Beijing can “offer the menu that investors are craving”. Photo: Bloomberg

Jens Eskelund (pictured), president of the EU Chamber of Commerce in China, says a real challenge is whether Beijing can “offer the menu that investors are craving”. Photo: Reuters

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Sales of Chinese electric vehicles are on the rise in Europe. Photo: AFP

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Local-level authorities in the nation’s capital say that revenue earned by foreigners, Hongkongers, Macanese and Taiwanese will be allowed to freely flow in or out, without delays
Move comes as cross-border capital flows have depreciated the yuan and contributed to an unpredictable business environment in China


China is combating a capital exodus that has depreciated the yuan and contributed to an unpredictable business environment in the country, while investors continue to call for more transparent policies.
