New rules in 2018 to tighten up Chinese Outbound FDI.

SCMP

In a directive released on Tuesday, the National Development and Reform
Commission said that all foreign investment deals by Chinese firms,
including those conducted by their overseas affiliates, must be reported
through a new online, government-run information system.

Furthermore, all deals involving “sensitive” countries – those that no have
diplomatic ties with China or are engaged in civil war – or sensitive
industries – weapons manufacture and the media – will be subject to Beijing’s
approval, the country’s top planning agency said.The current regulations list
telecommunications, land development and power grids as sensitive sectors.China
seeks to rein in overseas investment with 36-point code of conduct for private
firms

In the case of non-sensitive deals, those valued at US$300 million or more must
be registered with the NDRC, while those below that figure must be registered
with local authorities, the statement said.With the revised regulations Beijing
is seeking to strike a balance between encouraging outbound investment to support
its “Belt and Road Initiative” – an intercontinental trade and infrastructure
development plan – and preventing an unbridled exodus of capital.

According to Wang Jun, chief economist at Hong Kong-listed Zhongyuan Bank, the
new rules are about creating a clear operating framework for businesses seeking
overseas expansion, rather than “simply blocking some deals”.

While the NDRC statement said that outbound business expansion should not damage
the national interest, such “irrational investment has been largely curbed”, he
said.China moves to close overseas investment deal ‘loophole’

China began targeting “irrational” deals – often involving high-profile hotels,
cinemas and sports clubs – after outbound investment last year rose to an all-time
high of US$170 billion,causing the value of the yuan to slump and leading to massive
capital outflows.

After President Xi Jinping described rampant outbound investment as a “national
security matter”, the banking regulator this summer began scrutinising several of
the country’s top private sector deal makers, including Wanda, HNA Group and Anbang.
China conglomerate goes offshore with US$803m UK wind farm deal

In a statement explaining the rule changes, the NDRC said they were aimed at cutting
red tape.Most notably, the revision removes the requirement for Chinese firms involved
in overseas deals valued at more than US$300 million to seek “pre-approval” from the
commission before starting the bidding process.China will support qualified firms to
“go out” and guide the direction of investment, boost the belt and road plan, and
promote international capacity cooperation, NDRC vice-chairman Ning Jizhe said at a
forum over the weekend.

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