China's Safe opens doors for foreign lenders

The recent changes to Safe rules on cross-border fundraising are a baby step forward, offering opportunities for foreign lenders.

A relaxation of rules governing the use of guarantees involving Chinese borrowers and external lending is just the start of a broader deregulation and should offer foreign groups more opportunities, according to a loans industry spokesman.

The new rules, issued by China's State Administration of Foreign Exchange Safe, took effect on June 1 and allow mainland companies to use onshore assets as collateral when raising funds offshore. However, Chinese companies are still subject to PRC law which restricts the use of assets in certain industries such as telecoms from being used as collateral.

“This is the beginning of a deregulation process,” Atul Sodhi, chairman of the...

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