China aims to curb irrational investment

Enterprises violating overseas investment rules will be blacklisted and face 39 penalties imposed by the nation’s top regulators as China takes further steps to curb irrational and unauthentic offshore investment moves.

China’s top economic regulator on Tuesday published detailed rules to punish “discreditable” enterprises, referring to those that are found to be involved in illegal outbound investments or in moves to book profits by short-selling the yuan.

In an exclusive interview with China Daily in September, an official from the National Development and Reform Commission said the central government will issue a slew of measures to refine the current steps to regulate irrational outbound investment.

The official said the government might loosen some of its grip on outbound investment in future if irrational outbound buying sprees are “effectively controlled”.

Some enterprises, using money borrowed from domestic banks, have been purchasing various assets in foreign countries, such as hotels and soccer clubs, some of which may have been involved in illegal money laundering activities.

The latest guideline came after the central government issued a slew of measures since late last year, aimed at ensuring the authenticity of outbound investment and controlling risks.

The guideline said enterprises that were involved in such behavior would not be allowed to purchase foreign exchange or make outbound investment.

Enterprises on the blacklist will also be subject to tighter scrutiny of domestic investment activities from government regulators, and their cooperation with local governments, say, land purchases, would be affected because of illegal outbound investment behavior, the guideline said.

The information will be shared across different regulatory