China Says Foreign Firms Need Not Fear Capital Controls

(Beijing) — China is trying to allay concerns voiced by firms and investors who fear Beijing’s yearlong effort to contain capital outflows might be affecting regular transfers of funds abroad.

Measures adopted to control the capital drain are targeting short-term speculators and will not affect cross-border fund transfers by foreign companies legally operating in China, Wang Shouwen, the deputy minister of Ministry of Commerce, said Friday at a media briefing sponsored by the State Council, China’s cabinet.

Since the government tightened its scrutiny of fund transfers about a year ago, foreign companies have complained about long delays when trying to move large sums of money out of China. Delays have been reported even after companies provided all the required documents.

Among those flagging concerns in recent months was Shoreline Capital Management, a private U.S. dollar-fund manager based in Guangzhou. The firm said it has been made to wait for up to a year to be allowed to transfer money out of China.

Wang said China would not change its policies, which are designed to safeguard the lawful rights and interests of foreign companies. The government will also continue to improve foreign investor services, he said.

China’s total foreign capital holdings have actually strengthened since last year, Wang said, rising 3.9% during the first 11 months of 2016, compared to the same period 2015, to 731.8 billion yuan ($106 billion).

Due to the sluggish world economy, the government estimates foreign capital utilization for the whole of 2016 was almost equal to 2015, Wang said.

Contact reporter Dong Tongjian (tongjiandong@caixin.com)