China targets individual offshore investment loopholes

China is set to roll out rules that would put individual investors on the same regulatory footing as companies when it comes to outbound investment, covering everything from purchases of overseas property to acquisitions of foreign companies, reports the South China Morning Post. Chinese legal experts have said the move will close gray areas long used by wealthy individuals to channel assets abroad.

Under the new draft rules, “the main channels for individual portfolio investments remain secure, but gray-market workarounds will face a shrinking space to operate”, said Li Fan, a Hefei-based lawyer and partner at the Lantai Partners law firm.

The revision comes as overseas property purchases, direct investments in overseas businesses and offshore holding platforms have remained popular asset-allocation choices for high-net-worth individuals in China. Over the past year, China has also stepped up its crackdown on illegal cross-border financial activity and tax evasion through the channelling of assets abroad.