Foreign companies free to remit profits from China, say FX authorities

China’s foreign exchange authorities said on Tuesday that foreign companies are free to remit profits out of the country using normal procedures, in the latest effort to reassure investors that new capital controls aren’t overly restrictive.

The Financial Times reported in December that several European companies have been unable to repatriate profits from China due to foreign exchange controls. That report followed a series of other moves to clamp down on foreign currency outflows, notably tighter approval requirements for outbound acquisitions.

Since then, rumours have circulated about specific companies facing remittance difficulties. The People’s Bank of China and the State Administration of Foreign Exchange posted identical statements on their official Sina Weibo accounts on Tuesday stating that normal procedures were in effect.

The statements reiterated China’s commitment to full renminbi convertibility under the current account and said that companies can conduct payments for goods, services, and dividend payments based on “authentic and valid documentation”.

As capital controls have tightened in recent months, SAFE has described the changes as stricter enforcement of existing regulations rather than a rollback on market opening. In late January, the agency denied a separate FT report that new controls had were affecting commonly-used trade finance tools.

Late on Monday, SAFE said it had uncovered an underground money changing operation in Shenzhen worth Rmb50bn. It also boasted of enforcement efforts against the use of fake trade documentation by “many companies”. In the same statement, SAFE director-general Pan Gongsheng pledged to maintain financial openness for cross-border flows while supporting a balance of inflows and outflows.