China eases cross-border financing rules to lure foreign capital

The nation’s housing slump has dragged on for more than four years, with sales falling further since the second quarter.

China’s foreign exchange regulator has unveiled measures to streamline the country’s cross-border investment and financing rules in the latest push to deepen market reform and attract overseas capital.

Restrictions on companies using foreign exchange income under capital accounts for purchasing non-self-use residential property have been lifted, according a statement from the State Administration of Foreign Exchange late Monday. The regulator also eased rules on using foreign exchange for property purchases nationwide, allowing overseas individuals to settle payments earlier.

The property-related policy restrictions were imposed to curb speculative “hot money” in the real estate sector, and the updated rules have be implemented to back property market development, the regulator said. China’s existing home prices declined at an accelerated pace in last month, highlighting the need for broader support, even as major cities relax purchase restrictions.

“China’s real estate market conditions have changed and macro-control measures for the industry have been refined and adjusted,” the regulator said. “Against this backdrop, it has become necessary to optimize and adjust the relevant foreign exchange management measures to better align with the new environment and requirements and to support the steady and healthy development of the property market.”

The nation’s housing slump has dragged on for more than four years, with sales falling further since the second quarter. The prospect of a revival isn’t in sight, as the broader economy appears to have lost even more traction in the second half of August, according to Bloomberg Economics.

The regulator also scrapped registration requirements for preliminary expenses and reinvestments, and said foreign exchange profits earned by foreign-invested enterprises can be reinvested domestically. It also raised foreign debt quotas for high-tech companies to support growth for the sector.