At the recent Cash Management University in Paris, BNP Paribas explained how there are now five ways to release trapped cash in China:

1. Dividend payment: this is the traditional way of cash repatriation. However, it is subject to withholding tax, and has a limit of frequency about once or twice a year.
2. Inter-company loan: This is subject to SAFE's (State Administration of Foreign Exchange) approval. Domestic companies can lend its excess cash to overseas group/sister companies. The loan principle is not subject to withholding tax, but it is capped at the unpaid dividend of the domestic entity and the maximum tenor is two years.
3. Panda Solution (Back-to-back solution): Domestic entity to keep the excess cash with the bank in China, and use it as collateral to issue a SBLC (Stand By Letter of Credit guarantee) to overseas, where the overseas bank will extend a credit facility backed by this SBLC. (If the SBLC is in foreign currency, an overseas guarantee quota given by SAFE would be applied on the SBLC issuing bank. If the SBLC is in CNY, then PBOC's (Peoples Bank of China) clearance is necessary.)
4. QDII (Qualified domestic institutional investor): The QDII is a special channel approved by the government to the domestic financial institution like BNPP. Under the QDII quota, the bank can help domestic companies to invest its excess cash into overseas capital market instruments, including the Corporate Bond issued by its own group. (Basically there is no limit in terms of the tenor and amount -only limit is the QDII quota assigned to the bank.)
5. Cross-border cash pooling: According to the recent deregulation by SAFE and PBOC. MNC groups are allowed to establish " cross-border cash pooling " structure to link it's domestic cash pool with overseas cash pools. In this practice, an overseas lending quota needs to be approved by SAFE (FCY - foreign currency) or by PBOC (CNY). (BNP Paribas stressed that this still under piloting stage, any corporate intending to establish such structure needs to find a partner bank, and prepare a joint proposal/application to seek the authority approval.)

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Excellent advice from BNP Paribas who have an increasing presence in China and Asia-Pacific.