By Qi Zhang, Dacheng Law
Offices
The Provisions on Foreign Exchange Administrative of
Cross-Border Security (“New SAFE Rule”) (跨境担保外汇管理规定Hui Fa [2014] No.29) released by the
State Administration of Foreign Exchange (“SAFE”) of China became effective on
June 1st, 2014. The New SAFE Rule allows onshore Chinese
corporations to use onshore assets as guarantee to access offshore financing (内保外贷) with no preapproval requirement. Prior
to the New SAFE Rule, only state-owned enterprises, such as China Petroleum,
could provide domestic assets as guarantees against offshore debt without prior
approval from SAFE. Thus, the New SAFE rule is viewed as a positive regulatory development
to Chinese non state-owned corporations to raise offshore capital. 
