China unveils fresh support for companies investing overseas

BEIJING (Reuters) - China will simplify currency rules and step up credit support for companies investing overseas, the cabinet said on Wednesday, in the latest move by the government to tackle excess factory capacity at home and help local firms grow globally.

The government will cut red-tape for firms investing abroad, allowing them to exchange money directly at banks, no longer needing to register with the authorities prior to such deals.

It will also widen the financing channel to help firms "go out" with more bank support for major equipment makers, the cabinet said, calling for "diversified use of foreign exchange reserves" in the process.

Increased outbound investment helps China export surplus capacity and makes Chinese products, especially equipment products, more competitive internationally, the cabinet said.

The government has been encouraging outbound direct investment by local firms to help slow down the rapid build-up of the country's foreign exchange reserves and help improve local firms' competitiveness in the global market.

The government will also simplify its approval procedure for banks to set up branches overseas, and for firms to list shares abroad and pursue mergers and acquisitions, it said.

The geographical limit on issuing yuan-denominated bonds by domestic firms and banks in overseas markets will be abolished.

In September, the Ministry of Commerce simplified rules to make it easier for domestic companies to invest overseas.

China's outbound investment by non-financial firms hit US$89.8 billion(S$112.28 billion) in the first 11 months of 2014, up 11.9 percent from a year earlier. China drew US$106.2 billion in foreign direct investment (FDI) in the first 11 months.

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