New Safe rules do little to help Chinese borrowers

China’s new SAFE cross-border rules enable Chinese borrowers to back loans with onshore assets but restrictions over remitting the funds back onshore will cap borrowing.

New rules that make it easier for Chinese companies to use onshore assets as security for offshore loans are unlikely to spark a wave of lending. The rules were issued by China’s State Administration of Foreign Exchange Safe on June 1, but restrictions over remitting the proceeds back onshore has dampened initial enthusiasm.

The dominance of state-owned enterprises in China’s bank lending market has typically made it difficult for private-sector businesses to find affordable funding. Safe’s new rules were seen as a move to encourage offshore lending into the private sector, while also providing additional security for lenders and investors amid growing concern over regional banks’ exposure to Chinese debt....

¬ Haymarket Media Limited. All rights reserved.

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