Opportunities for Foreign Credit Funds in China

• Date: 20 July 2020
• Author: Xiaoxue (Stella) Wang,Andrew Fei,Zhongyun Yi,Stanley Zhou
• Citation: jd0034
• Published date: 20 July 2020
• Subject Matter: Banking & Finance

2020/9/10 Opportunities for Foreign Credit Funds in China | China Law Insight

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CHINA LAW INSIGHT

Opportunities for Foreign Credit Funds in China

By King & Wood Mallesons on July 20, 2020

Written by: Stanley Zhou, Xiaoxue (Stella) Wang, Andrew Fei and Zhongyun Yi, King

and Wood Mallesons

Recently, many foreign credit funds have their sights set on the Chinese market. With the

further opening-up of the capital account and the Chinese government’s commitment to

create a favorable business environment for foreign investment, there are now more

channels and methods for foreign credit funds to invest in Chinese assets. The main

asset types favored by foreign credit funds are Chinese real estate, non-performing

assets and other types of credit assets portfolios, with investments being made using

increasingly diversified structures. This article discusses the key channels through which

foreign credit funds can invest in Chinese assets and the key PRC legal issues

associated with them.

1. Direct financing and investments

Providing cross-border loans to Chinese enterprises and directly acquiring Chinese

domestic assets have become the easiest and most convenient channels for foreign

capital to enter the Chinese market. This is due to the gradual expansion of the types of

eligible domestic borrowers, the gradual relaxation on the amount and currency of foreign

debt that Chinese enterprises can borrow as well as the introduction of pilot programs to

facilitate cross-border transfers of domestic assets. Having said this, investments into the