SAFE Eases Restriction on the Scale of ODI Upfront Expenses

On July 24, 2023, the State Administration of Foreign Exchange (“SAFE”) released the Circular on Further Deepening Reform to Facilitate Cross-border Trade and Investment (Exposure Draft) (the “Circular”) for public comment until August 2, 2023.

The Circular intends to promote three policies covering ten items. The first is to improve the cross-border trade opening policy, which includes four current account policies. The second is to expand the coverage of the capital account facilitation measures, covering three policies, i.e. the policy of facilitating cross-border financing for technology-based small and medium-sized enterprises, the policy of easing the restriction on the scale of upfront expenses of overseas direct investment (ODI), and the policy of facilitating the payment and use of equity transfer funds under domestic reinvestment of foreign-invested enterprises (FDI) and funds raised from overseas listing. The third is to optimize the foreign exchange management measures for capital accounts.