China drawing up rules to control overseas investment
March 27, 2017 Category Foreign investment, Weekly
China plans to publish rules this year on outbound investment (ODI) by Chinese firms that would spell out the sectors in which investing is encouraged and those where it is restricted. Chinese regulators have clamped down in recent months on outbound deals as part of efforts to stem rising capital outflows that have contributed to a weakening yuan. Chinese Commerce Minister Zhong Shan said earlier this month that a small number of Chinese companies had invested overseas “blindly and irrationally” in investments that China does not encourage. Therefore, the State Administration of Foreign Exchange (SAFE) will more closely monitor “irrational” investment in property, entertainment, sports and other sectors. Efforts to contain outbound investment appear to be having a significant effect. Non-financial outbound investment fell 52.8% from January to February from the same period last year, with amounts in the property and entertainment sectors down over 80%. Chinese firms invested about CNY1.1 trillion in 164 countries and regions in 2016, a year-on-year increase of 44.1%.
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