Chinese Government Gives 6 Foreign Companies a Helping Hand: Intel Corporation (INTC), Caterpillar Inc. (CAT)

It looks like China wants to attract more business from multinational giants.

Intel Corporation (INTC)

The government just gave six foreign firms the right to move more capital across Chinese borders, according to a Reuters report. Western companies have invested billions of dollars in Chinese facilities because the local economy’s expansion is seen as a massive growth-driver. But the Chinese government has placed strict limits on what you can do with profits gained in the country, which leaves a lot of money locked up in Chinese bank accounts.

The Great Wall around Chinese money is starting to spring leaks. Image source: Wikimedia user Jakub Halun.

The easing of money-transfer rules starts with a small batch of very large businesses. Some are Chinese corporations with significant business interests abroad that will now be able to bring more cash back into their home country. And then you have six handpicked foreign companies, presumably interested in moving money in the opposite direction.

The test batch includes two Dow Jones Industrial Average (Dow Jones Indices:.DJI) components, namely chip giant Intel Corporation (NASDAQ:INTC) and construction machinery expert Caterpillar Inc. (NYSE:CAT). Intel Corporation (NASDAQ:INTC) recently reminded analysts that “China is still outgrowing any other large economy in the world,” and CEO Paul Otellini is particularly pleased with server sales in the region.

Caterpillar Inc. (NYSE:CAT)’s current guidance assumes that the Chinese government will encourage economic growth in 2013, with GDP forecast to expand by roughly 8.5%. If so, management expects “a more favorable environment for construction and higher commodity demand,” which will contribute to revenue growth this year. This money-transfer change plays right into that assumption.

The other non-Chinese businesses in this program are Dutch oil supermajor Royal Dutch Shell, French-American network-gear builder Alcatel Lucent SA (ADR) (NYSE:ALU), all-French power-management specialist Schneider Electric, and South Korean electronics giant Samsung (NASDAQOTH:SSNLF).

Samsung has more than $2.3 billion in Chinese assets and collected $21.5 billion of revenue in the nation last quarter. It’s the company’s second-largest market by revenue after Korea itself, and 20% larger than North and South America combined. It’s a far less significant market for Alcatel, but the troubled networking expert will take whatever help it can get. The company is in full-on turnaround mode with a brand-new CEO and a questionable balance sheet.

Looser money controls might encourage all of these current and former blue chips to increase their presence in China, as they can expect easier access to the money they make there. And the virtuous cycle turns, or so China hopes.

The article Chinese Government Gives 6 Foreign Companies a Helping Hand originally appeared on Fool.com and is written by Anders Bylund.

Fool contributor Anders Bylund owns shares of Intel, but he holds no other position in any company mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+. The Motley Fool owns shares of Intel. Motley Fool newsletter services have recommended buying shares of Intel.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

6 Ways to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

The 40 Best Fortune Cookie Sayings That Will Leave You Bemused, Befuddled, or Beguiled

10 Foods to Eat Before a Workout to Make Every Drop of Sweat Count

The 5 Best Documentaries On Netflix You Must See

The Most Heartwarming and Inspirational Story Of This Halloween Season, It Will Make You Cry and Jump For Joy

10 Best Party Songs of All Time to Bring the House Down With

5 New World Order Conspiracy Theories that Will Strangle the World

The 10 Highest Rated Movies of 2014

The 10 Largest Container Shipping Companies in the World

The 10 Largest Armies in the World: Who Should We Be Afraid Of?

Best Warren Buffett Quotes on Money You Need to Hear

The 10 Highest Suicide Rates by Profession

The 20 Most Underrated Movies of All Time

The 10 Fastest Growing Companies in America

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!