China cracks down on foreign spending sprees

BEIJING: China is to restrict foreign investments in sports clubs, real estate and entertainment and is banning investment in pornography and “unauthorised” military technology.

The new rules were announced on Friday by the government which had previously encouraged overseas spending sprees, but then warned late last year of “irrational”acquisitions amid fears that powerful conglomerates were racking up dangerous debt levels.

The announcement came days after British football club Southampton said it had entered into a partnership with Chinese businessman Gao Jisheng, with press reports saying he and his family had paid £200 million (RM1.16 billion) for an 80% stake.

“Foreign investments that do not conform to China’s efforts towards peaceful development, mutually beneficial cooperation and to macroeconomic regulation are subject to restriction,” said the government, adding it wanted to “prevent risks”.

Chinese firms will no longer be able to invest in conflict zones and places that do not have diplomatic ties with China. The rules also ban investments that could harm the country’s interests and security.

The only companies still permitted to make overseas investments are firms “supporting the real economy” or working with new technologies. – AFP