Chinese state media has reported that China may soon publish rules restricting outbound investment by Chinese firms in certain sectors. According to Chinese Commerce Minister Zhong Shan, a few Chinese companies have invested overseas “blindly and irrationally”. The government will now seek to closely monitor “irrational” investment in sectors like real estate, sports and entertainment, among others.
Non-financial Chinese outbound investment dropped 52.8% between January-February 2016 and January-February 2017. In the real estate and entertainment sectors, the drop was even more dramatic, reaching 80%. This is arguably a direct result of the government’s recent efforts to control outbound investment.
The report by state-run Economic Information Daily has named the Ministry of Commerce and the National Development and Reform Commission as being the two entities leading the formation of the new rules. It also quotes an unidentified source saying “overseas investments that produce social and economic benefits, that are in line with the country’s ‘One Belt One Road’ and global industrial capacity cooperation strategies will be encouraged”. The source went on to add that ‘blind’ and irrational investments will not be encouraged and supervision will be increased. Investments that violate laws in the target country or in China and other harmful behaviour will be forbidden and punished.”
In light of these developments, it will become significantly more difficult for foreign business cases to access Chinese capital without the benefit of a facilitator to help introduce them to Chinese investors. Investors will become more selective and cautious when choosing where to deploy their capital, and many will rely on facilitators, investor meetings and roadshows.
On 30th August 2017, Naseba will be hosting the real estate investor meeting in Shanghai. At the meeting, pre-screened Chinese investors will be introduced to pre-qualified Chinese healthcare investment opportunities.
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