Sunday October 20, 2019

CHINA LAUCHES PILOT PROGRAM FOR
FINANCIAL REFORMS IN WENZHOU

April 6, 2012

Wenzhou, known as a hub for private entrepreneurship, has become the first city in China to allow private investors to directly invest overseas. The Chinese government has recently approved Wenzhou’s proposal for financial reform, and requested the city to “research and initiate the experiment of direct overseas investment, and set up a standard and convenient channel for direct investments.”

According to the regulations issued by China’s State Council, Chinese residents have a $50,000 limit for maximum foreign exchange, and individuals are forbidden to invest directly overseas. Many investors turn to the informal market, Chinese friends overseas or though establishing enterprises. It is estimated that the private capital in Wenzhou has reached around 150 billion USD.

The new policy stipulates that the maximum direct investment per year should not exceed 200 million USD for individual, and 1000 million USD for multiple individuals in the same project. Investors can set up non-financial enterprise overseas through establishing, merging, or shareholding; they can also gain the ownership and management of the pre-existed non-financial enterprise overseas through the ways aforementioned. Loosing overseas investment rules will liberalize the capital account and help Chinese government to better protect the legitimate interest of individual investors.

 

For further information on Wenzhou’s pilot program for financial reforms, please see the following news sources and commentary:

 

Wall Street Journal“China Launches Financial Reforms In Wenzhou”

People’s Daily“Financial pilot project in Wenzhou to boostprivate investment overseas”

Reuters“China may allow more overseas investment: central bank head”

 

For Chinese commentary on Wenzhou’s pilot program for financial reforms, please see the following news sources:

 

Xinhua 新华 “温州成为内地首个允许个人境外直接投资的城市”

Xinhua 新华 – “个人境外直接投资将重启:万亿温州民资开闸意味着什么?”

Compiled and edited by Chenxi Li.