Chinese outbound investment headed for more scrutiny

Chinese outbound investors can expect to see more regulatory scrutiny when it comes to “sensitive countries and regions” or “sensitive industries”.

According to a report from Xinhua, several key regulators in China, including the Ministry of Commerce, released new regulations on outbound overseas investment.

Companies investing abroad were previously only required to complete record filings with central or local economic planners before their investment projects started.

Under new rules, companies looking to invest abroad will be required to provide all information to related regulators. It also stipulates that outbound investment projects of at least US$300 million or those in “sensitive countries and regions” or “sensitive industries” will be the focus of regulatory supervision and examination.

Last year, China’s outbound direct investment recorded its first annual slump since 2009, due to increased scrutiny on capital outflows and foreign acquisitions.

While some observers believe that capital controls and scrutiny may ease as the yuan stabilizes, others see the increase in supervision to continue.