Chinese city allows individual overseas investment
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Residents in a Chinese city boasting of its entrepreneurship are allowed to invest overseas as individuals in a pilot scheme that authorities say will help manage the burgeoning capital flow in the private sector.
The city of Wenzhou, in the eastern Zhejiang Province, will allow adult residents to invest up to 3 million U.S. dollars in a single project and no more than 200 million U.S. dollars a year, the municipal bureau of foreign economic and trade cooperation has announced.
A group of individuals are only allowed to buy 10 million U.S. dollars worth of foreign exchange in a single offshore investment.
But their offshore investments are banned from stock markets, and the real estate, energy and mining sectors. All investments need to be approved by the municipal bureau of foreign economic and trade cooperation.
Under the pilot scheme, individual investors can own, control or manage foreign companies (excluding financial institutions) by setting up entities, buying shares or initiating mergers and acquisitions.
"Allowing individual overseas investment will help authorities monitor and manage the flow of private capital overseas," said Su Xiangqing, head of Wenzhou's foreign economic and trade cooperation bureau.
In the past, individual investors circumvented restrictions on personal investment by setting up offshore firms to channel funds overseas, Su said.
Wenzhou is one of a string of boomtowns along China's southeast coast that prospered with private business in recent years. Official statistics show the private capital amassed by the city's residents has exceeded 600 billion yuan (90.9 billion U.S. dollars).
Official figures show that Wenzhou natives had established around 600 offshore companies by the end of 2009.
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