The Ministry of Commerce announced on December 16 that it will further loosen controls on cross-border yuan direct investment.

Under the new regulations, approval procedures for yuan-denominated direct investment from overseas investors will be further simplified. The new regulation will take effect on January 1, 2014.

With cross-border yuan direct investment, foreign investors use legally acquired yuan to make investments in China by founding companies, increasing investments, or participating in mergers and acquisitions of domestic enterprises.

Foreign investors are still not allowed to invest in negotiable securities, financial derivatives, or entrusted loans in yuan.

The existing regulations, which took effect in 2011, require provincial bureaus to report to the ministry for further approval if foreign investors' yuan investment hits 300 million yuan ($49 million) or more, or if their investment is in sectors such as financial guarantees, financial leasing, micro-credit, auctions, cement, steel, electrolytic aluminum or shipbuilding.

The new regulations have no such requirements. Overseas investors also include those from Hong Kong, Macao, and Taiwan.