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China Eases Curbs to Woo Global Investors Ahead of US Elections

By Jacob Gu
CANBERRA, AUSTRALIA - APRIL 24: Anti Chinese protesters and pro Chinese people wave flags as they are separated by police during the Olympic Torch relay at Parliament House on April 24, 2008 in Canberra, Australia. The relay route in the Australian capital was altered after the events in Paris and London were disrupted by protestors. Protestors gathered in Canberra to protest China's policies toward Tibet, disrupting the torch route and ceremonies, as the Olympic Torch Relay holds its only stop in Australia. (Photo by Mark Nolan/Getty Images) (Mark Nolan/Photographer: Mark Nolan/Getty I)

(Bloomberg) -- China is taking further steps to attract foreign money just days before US elections that have raised concern about the impact on the world’s second-biggest economy from a return of Donald Trump to the White House.

Foreign individuals are now allowed to provide capital for publicly traded firms as strategic investors, the China Securities Regulatory Commission, the Commerce Ministry and four other regulators said in a statement late Friday.

Previously, an overseas foreign investor aiming to take a non-controlling stake in an enterprise had to have at least $500 million. That’s now cut to $300 million, according to the statement.

Foreigners can now also make strategic investments through tender offers other than private placements or transfers-by-agreement. At the same time, regulators removed the 10% minimum stake requirement for investments made in private placements. The mandatory holding ratio for shares acquired through tender offers or transfers-by-agreement was reduced to 5%, with the lock-up period for all types shortened to 12 months from three years.

“Beijing is doing so now to mitigate the impact of a potential Trump victory on sentiment, but an announcement beforehand could avoid leaving the impression that Beijing is wary of Trump or worried about the possible outcomes of the US elections,” said Neo Wang, Evercore ISI’s New York-based managing director for China research. “Given the recent poor FDI inflows to China, these measures have been long overdue, regardless of who will get elected.”

Net foreign direct investment into China has deteriorated over the past several quarters amid disappointing economic growth figures and continuing concerns about the regulatory backdrop.

US voters head to the polls Tuesday in what’s shaping up to be a tossup between Trump and and his Democratic rival Kamala Harris. The former president has said he might impose a tariff on Chinese goods of more than 60% if elected. Higher US tariffs on Chinese goods could dent growth but also force a long-awaited shift to the consumer in the Asian nation, according to economists at Goldman Sachs Group Inc. 

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