With global credit markets remaining tight and China's
economy slowing, foreign investors may need to access some of
the money they have invested in China. However, China's foreign
exchange regime includes a number of restrictions to safeguard
China from sudden large-scale withdrawals of capital.
Repatriation of dividends and royalties is relatively
straightforward but China's foreign investment regime also
includes a number of limitations on foreign investors' ability
to reduce investment capital. Foreign investors that do not
withdraw capital in accordance with the rules may have
unlimited liability for the debts of their investment
enterprises in China.
The combination of foreign exchange controls, limits on
capital reduction and the possibility of unlimited liability
mean that foreign investors must be careful when drawing on
investments in China for funding purposes elsewhere.
Trapped cash China's currency, the renminbi (Rmb), is not
fully convertible; strict controls prevent the conversion of
capital account items without the...