China has resumed approvals for institutions to buy overseas securities under its tightly managed offshore investment regime after a 17-month hiatus, suggesting Beijing believes the worst of the financial crisis is over.

The resumption in approvals for outward investment also signals a return to Beijing’s earlier strategy of encouraging outflows to relieve pressure on the Chinese currency to appreciate.

“In order to keep the nominal exchange rate stable, the government has to allow more capital to flow out,” said Wang Tao, chief China economist at UBS Securities. “But they want to encourage outflows in a controlled way and as long as they have some kind of upper quota they will not be able to fully offset the appreciation pressure from inflows.”

Beijing has also been encouraging more direct investment by Chinese corporations in offshore industries and is considering allowing foreign institutions to raise capital through equity and bond sales in China; both actions encourage capital to flow out of the country. (Financial Times)

And all over the U.S. and Europe, managing partners and lawyers on marketing committees in international law firms are getting sexually aroused as they fantasize about picking up some of these outward investment deals from Chinese companies.

Was that indelicate? Apologies, but believe me, there will be quite a few last-minute trips to China made by senior partners at law firms during the next couple months.