New rules on overseas investment

> China steps up measures to curb unhealthy activities of private firms

BEIJING: China’s powerful state planner yesterday issued new rules for overseas investment by private companies, aiming to stamp out instances of firms violating policies, engaging in unfair competition and poor safety and quality management.

As Chinese companies take an increasingly visible role in the global economy, the rules, issued jointly by the National Development and Reform Commission, the central bank and other government bodies, look to regulate their overseas activities.

Beijing has been stepping up scrutiny of outbound investment after a surge in international deals last year fuelled concerns that some deals were being used to disguise capital flight as the yuan currency weakened.

Chinese firms should make overseas investments based on their own conditions and abilities, exercise caution, and respect Chinese and hostcountry rules, say the rules published yesterday.

“Private firms’ overseas investment operations should adhere to fair competition ... (and firms) must not bribe local public officials, or personnel from international organisations or related enterprises,” they added.

The government has issued rules for overseas investments by state firms and guidelines to better control outbound capital flows.

Last month, the state planner issued guidelines to monitor overseas activities of Chinese firms and individuals to prevent tax fraud and activities that damage the country’s reputation. The rules urged private firms to improve risk controls, set up contingency plans, and strengthen safety measures in overseas investments.

The firms must do environment impact assessments of overseas investment projects and due diligence on the environmental track record of acquisition targets, the rules say.

In another development, China’s top leaders have started an annual meeting to map out economic and reform plans for 2018, the official Xinhua news agency reported yesterday.

The meeting will focus on implementing agendas laid out by a key Communist Party Congress in October, it said.

The closed-door Central Economic Work Conference is keenly watched by investors for clues on policy priorities and key economic targets for the year ahead.– Reuters