Reforms in China aimed at easing cross-border lending to Chinese companies could prove a boon to private debt fund managers eager to invest in the region, according to AIM-listed Adamas Finance Asia (ADAM).
The reforms, introduced earlier this month by China’s State Administration of Foreign Exchange (SAFE), were designed to address concerns that a scarcity of credit and slowing investment might prove a barrier to China’s aim to achieve 7.5 percent growth in GDP in 2015.
Law firm Clifford Chance believes the reform will reduce transaction times and associated costs for offshore investors who will also benefit from increased flexibility and improved enforcement of security.
“We have little doubt the streamlining of rules resulting from the new changes will result in even wider investment opportunities within China. Key among the changes is the removal both of quotas and of the need for SAFE approval on collateral for cross-border lending,” said ADAM chairman John Croft in a statement.
“These new moves, and the evidence of huge underlying demand for capital, demonstrate that while adjustments in the Chinese economy will continue to pose challenges for the government, demand from a large number of individual businesses is set to remain strong.”