Go­ing out

Out­bound in­vest­ment will con­tinue to grow

China Daily (Hong Kong) - - FRONT PAGE - By YANG ZIMAN yangz­i­man@chi­nadaily.com.cn

China’s out­bound in­vest­ment is ex­pected to con­tinue to grow next year, de­spite ef­forts to tighten ir­ra­tional in­vest­ments — or risky and po­ten­tially dis­rup­tive in­vest­ments, the Min­istry of Com­merce said on Fri­day.

Min­istry spokesman Shen Danyang told a news con­fer­ence in Bei­jing that the au­thor­i­ties en­cour­age com­pa­nies to con­tinue to ex­pand and op­er­ate in­ter­na­tion­ally.

“At the same time, we need to put a cap on ir­ra­tional out­bound in­vest­ment in real es­tate, ho­tels, en­ter­tain­ment and sports to guard against risks,” Shen said.

He said that spe­cial at­ten­tion needed to be paid to com­pa­nies mak­ing large-scale in­vest­ments in fields out­side their main busi­ness, com­pa­nies of lim­ited part­ner­ship, and com­pa­nies in­vest­ing in over­seas projects that are big­ger than the mother com­pany it­self.

China’s over­seas di­rect in­vest­ment in the first 11 months stood at $161.7 bil­lion, up 55.3 per­cent year-on-year. That growth rate is three times higher than for the same pe­riod last year.

The min­istry did not elab­o­rate on the rate the coun­try’s out­bound in­vest­ments are seen grow­ing in 2017.

Some of the big­gest in­vest­ments in the cur­rent year in­cluded Wanda Group’s pur­chase of US movie mak­ing com­pany Leg­endary Pic­tures at $3.5 bil­lion, Midea Group’s takeover of Ger­man ro­bot man­u­fac­tur­ing com­pany KUKA at $5 bil­lion, and An­bang In­sur­ance Group’s ac­qui­si­tion of a lux­ury hous­ing project from the Black Stone Group for $6.5 bil­lion.

Four govern­ment de­part­ments — the Na­tional De­vel­op­ment and Re­form Com­mis­sion, the Min­istry of Com­merce, the Peo­ple’s Bank of China and State Ad­min­is­tra­tion of For­eign Ex­change — have re­cently made joint re­marks about tight­en­ing the ir­ra­tional in­vest­ment over­seas.

Fu Hongyu, deputy di­rec­tor of the re­search cen­ter of do­mes­tic and over­seas fi­nan­cial law at Bei­jing For­eign Stud­ies Univer­sity, said that on one hand in­vest­ment in in­fra­struc­ture con­struc­tion — par­tic­u­larly in the Belt and Road Ini­tia­tive re­gion — is to be en­cour­aged.

On the other hand, he added, in­vest­ments in ar­eas where hot money and spec­u­la­tion thrive will be sub­jected to stricter re­view.

“Man­age­ment of in­dus­tries such as ho­tels, en­ter­tain­ment and sports is com­pli­cated be­cause it is easy to rig the taxes and statis­tics, which makes them ideal chan­nels for money laun­der­ing,” Fu said.

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