ODI Curbs

The Chinese Government released a guideline on August 19 to further tighten the grip on or ban outbound direct investments (ODI) in sectors including real estate, hotels, entertainment, sports and casinos to avoid investment risks or potential crimes.

China will continue to tighten review of the authenticity of overseas investment and its compliance with regulations, hoping to guide more investment into the real economy and to reduce investment in sectors Chinese companies are not proficient at managing, said Gao Feng, spokesperson of the Ministry of Commerce (MOFCOM).

“The government will continue to encourage legal overseas investments, especially in projects tied to the Belt and Road Initiative, and will help with the development of home industries,” said Gao.

The guideline stressed that ODI in hi-tech industries, hi-end manufacturing, agricultural cooperation and capacity-sharing projects that can help China export its standards, quality machinery and industrial equipment will be further encouraged to optimize China’s outbound investment portfolio.

The stricter scrutiny of overseas investment comes as China’s top leadership has pledged to prevent financial risks, especially against the backdrop of the decline of foreign exchange reserves and the rise of capital outflow.

Non-financial ODI by Chinese