Circular of the Ministry of Commerce on Issues Concerning Cross-border RMB Direct Investment

Shang Zi Han [2011] No. 889

Competent commerce authorities of provinces, autonomous areas, municipalities directly under the Central Government, cities with independent planning status, the Xinjiang Production and Construction Corps and Harbin, Changchun, Shenyang, Jinan, Nanjing, Hangzhou, Guangzhou, Wuhan, Chengdu and Xi’an as well as China national economic and technological development zones and border economic cooperation zones：

For the purpose of adapting to new situation, promoting the investment facilitation and further handling the utilization of foreign investment well, in accordance with related provisions of laws and regulations on foreign investment, the issues concerning cross-border RMB direct investment are hereby notified as follows：

Article 1 “Cross-border RMB direct investment” herein refers to direct investment activities conducted by foreign investors with the legally acquired offshore RMB within China according to law.  

Article 2 Offshore RMB herein refers to：

（I）the RMB acquired by foreign investors through cross-border yuan trade settlement, the RMB acquired by law within China and remitted abroad and the RMB acquired through share transfer, capital reduction, liquidation and recovering investment ahead of time;

（II）the RMB acquired by foreign investors legally at abroad, including but not limited to that through issuing RMB bonds and RMB stocks overseas.

Article 3Cross-border RMB direct investment and reinvestment of the invested foreign-invested enterprises should abide by the laws and regulations on foreign investment and related provisions as well as the national industrial policies for foreign investment and related provisions for security review of foreign capital merger and acquisition and anti-monopoly review.

Article 4Cross-border RMB direct investment shall not directly or indirectly be subject to securities and financial derivatives (except otherwise Article 11 of the Circular) as well as entrust loans within China.

Article 5The competent commerce authorities at all levels shall in accordance with the existing administrative provisions for review and approval of foreign investment and authorities review and approve RMB direct investment. Apart from related documents in accordance with laws and regulations on foreign investment and related provisions, foreign investors or foreign-invested enterprises should also submit to the competent commerce authority the following documents:

（I）Certification or supporting paper of RMB capital source；

（II）Capital purpose explanation；

（III）Cross-border RMB Direct Investment Statement.

Where the previous contribution currency shall be converted into RMB from foreign currency in the cross-border RMB direct investment, it shall be reported to the competent commerce authority for approval, and the resolution of the high authority of the enterprise including the Board of Directors and the amended contract or the articles of association (amended agreement) shall be provided apart from the above-mentioned materials.

Article 6The local competent commerce authority should record the Cross-border RMB Direct Investment Statement into the foreign investment examination and approval management system and report the cross-border RMB direct investment in the following situations to the Ministry of Commerce for examination and verification after the competent commerce authority at the provincial level signs and affixes the seal on the Cross-border RMB Direct Investment Statement.

（I）RMB contribution of RMB300m or above;

（II）Such industries as financing guarantee, financing lease, micro-credit and auction；

（III）Foreign-invested company, foreign-funded venture capital or equity investment enterprise；

（IV）State macro-control industries including cement, steel and iron, electrolytic aluminum and shipbuilding.

Article 7The Ministry of Commerce shall complete examination and verification or put forward the opinion on examination and verification within 5 working days upon receiving the Cross-border RMB Direct Investment Statement submitted by the competent commerce authority at the provincial level. If the examination and verification have been done, the local competent commerce authority may issue a reply and grant the certificate of approval for foreign investment enterprise.

Article 8The competent commerce authorities at all levels should mark “contribution in offshore RMB”, contribution amount and requirements as stipulated in Article 4 herein in the reply to cross-border RMB direct investment, and make notes in the remarks column of the certificate of approval for foreign investment enterprise of “contribution in offshore RMB” and contribution amount in RMB.

Article 9The competent commerce authorities at all levels should timely make a copy of the reply to cross-border RMB direct investment for such departments as the people’s bank, customs, taxation, industry and commerce and foreign exchange at the same level.

Article 10Cross-border RMB direct invest in the real estate should be subject to the existing provisions for examination and approval and filing administration over foreign investment in the real estate. If filing has been done, it shall be notified publicly on the website of the Ministry of Commerce (in the column of “results disclosure” at the sub-website of the Department of Foreign Investment Administration of www.mofcom.gov.cn), the foreign investment enterprise holds the public information on the website of the Ministry of Commerce (by logging on the website for information), the reply of the competent commerce authority and the certificate of approval for foreign investment enterprise to handle related formalities according to related administrative provisions.

Article 11Where any foreign investor uses the legally acquired offshore RMB to participate in the introduction and assignment of stocks through negotiation of the listed company within China, it should handle related formalities of examination and approval in the Ministry of Commerce in accordance with the Administrative Measures for Strategic Investment in Listed Company by Foreign Investors.

Article 12 Where any foreign investor uses RMB profits gained from its invested foreign-funded enterprise within China but not remitted abroad and the RMB from stock transfer, reduction of capital, liquidation and recovery of investment ahead of time to carry out direct investment, it shall still be subject to related provisions.

Article 13The competent commerce authorities at all levels should conduct inspection over cross-border RMB direct investment by referring to Article 4 herein while carrying out the joint annual inspection over foreign investment.

Article 14Any investor from Taiwan, Hong Kong and Macao who conducts cross-border RMB direct investment shall be subject to the Circular herein.

Article 15The business statistics requirements for cross-border RMB direct investment shall be separately notified.

Article 16The Circular shall take effect as of the day when it is released and prevail, if the previous provisions of the Ministry of Commerce for cross-border RMB direct investment.

To promote the standardizing and healthy development of cross-border RMB direct investment, the competent commerce authorities at the provincial level shall convey the Circular to the competent commerce departments at all levels in the jurisdiction and strengthen supervision and administration on examination and approval, and please timely contact the Ministry of Commerce (the Department of Foreign Investment Administration) to circulate a notice of related information in case of any problem in the implementation.

Attachment: Cross-border RMB Direct Investment Statement (omit)

Ministry of Commerce of the People’s Republic of China

October 12, 2011