Friday, November 25, 2016

China Issuing ‘Strict Controls’ on Overseas Investment

Some Donald Trump-style economic interventionist rule in China.

China plans to clamp tighter controls on Chinese companies seeking to invest overseas, intensifying efforts to slow a surge in capital fleeing offshore amid tepid growth and an uncertain economic outlook, reports The Wall Street Journal.

The State Council, China’s cabinet, will soon announce new measures that subject many overseas deals to reviews of “strict control,” according to people with direct knowledge of the matter and documents reviewed by The Wall Street Journal.

Targeted for particular scrutiny by the pending measure are “extra-large” foreign acquisitions valued at $10 billion or more per deal, property investments by state-owned firms above $1 billion and investments of $1 billion or more by any Chinese company in an overseas entity unrelated to the investor’s core business.

Chinese companies have been moving to scoop up needed technology and management expertise—much of it at Beijing’s blessing. Headline-grabbing deals include petrochemical giant China National Chemical Corp.’s pending $43 billion acquisition of Swiss pesticide maker Syngenta AG, and a bevy of real estate, finance and other investments by Anbang Insurance Group Co., a recently obscure company that has emerged as global deal maker., notes WSJ.

Concerns have grown among officials that the investment splurge may in some cases serve as a cover for getting around capital controls and sending money overseas.


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