China's top foreign exchange regulator has issued guidelines governing the sale and disposal of the country's bad assets to foreign investors.

The State Administration of Foreign Exchange (SAFE) said it was creating a regulatory framework to safeguard the interests of all parties involved in such deals.

The rules, which take effect Jan. 1, create another layer in the approval process for the deals, reflecting the rigid controls on China's foreign exchange regime.

They also come as the nation's biggest banks try to quickly reduce their non-performing loans before listing overseas.

Once a proposed bad asset sale clears the regulatory hurdles and the transaction has been completed, the details must be submitted to SAFE within 15 working days, SAFE said in a statement on its Web site.

The asset management firms are China Huarong Asset Management Co., China Great Wall Asset Management Corp., China Orient Asset Management Corp., and China Cinda Asset Management Corp.

Foreign investors will also have to send details of such sales to SAFE before the foreign exchange regulator allows the funds to be taken out of the country.

Foreign-Chinese joint ventures created with non-performing assets as part of an equity injection should adhere to existing rules governing foreign-invested enterprises, SAFE said.

In a separate statement, the China Banking Regulatory Commission (CBRC) said Wednesday that as of the end of November, China's four asset management firms had disposed of 605.3 billion yuan (US$73 billion) in bad assets.

At the same time, the firms have recovered 121.6 billion yuan in cash and 38.2 billion yuan in non-cash assets.

Huarong, Great Wall, Orient and Cinda were created in 1999 by the government to handle the non-performing assets of China's four biggest State banks.

Source: Shenzhen Daily