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China: Strict Control On Overseas Investment

(Credit: Photo by VCG/VCG via Getty Images)) China will be strictly controlling all kinds of overseas investment that they will have for them to monitor keenly every transaction.China: Strict Control On Overseas Investment
November 28
6:00 AM 2016

China had now plans on tightening the control over the Chinese companies who are all seeking the to invest overseas, intensifying efforts to slow a surge in capital fleeing off shore amid tepid growth and an uncertain economic outlook. 

China's cabinet and State Council will soon announce new measures that subject many overseas deals to reviews of "strict control". 

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.

While the government has been plugging holes to keep more money at home in recent months, the new measures are the first to go after big deals by China Inc. 

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.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.

The State Council's information office did not immediately respond to a request for comment on the new measures. The new controls will apply to deals yet to receive approval from China's top economic planning agency, the people familiar with the matter say.

The country's foreign-exchange reserves plunged $45.7 billion in October from September to $3.12 trillion.

Earlier this week, the central bank announced it will use a new risk-control system to monitor capital flows through Shanghai's much promoted free trade zone, which previously was hailed as a bold experiment to liberalize China's financial markets.

Under the current rules, companies trying to undertake many of the targeted transactions in foreign markets only need to register with the authorities and don't have to go through any lengthy approval process.

© 2016 VCPOST, All rights reserved. Do not reproduce without permission.
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