ANNOUNCEMENT 26 Dec 2017

December 26th, 2017 - The Chinese government announced the approval of a new set of rules governing outbound investment.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising

SOURCE

PRC National Development and Reform Commission, December 26th, 2017. (NDRC令2018年第11号)
http://www.ndrc.gov.cn/zcfb/zcfbl/201712/t20171226_871560.html

Inception date: 01 Mar 2018 | Removal date: open ended

FDI: Treatment and operations, nes

On December 26th, 2017, the Chinese National Development and Reform Commission announced they had approved a series of rules drafted earlier that year that directly affect the process and likelihood of approval of investments made from China into foreign countries.

The measures came into effect on March 1st, 2018.

From a non-state investor's point of view, the most important change brought forth by the announcement was that any 'indirect' outbound investments (i.e. those made by Chinese enterprises through their controlled overseas entities) now subject to approval, unless below USD 300m and in countries/regions/industries on the 'encouraged list' (see related act).

What this means is that any non-state Chinese investors wishing to significantly expand through any of their foreign entities must now go through the Chinese government or face serious consequences.

Other key changes are listed below - some of which are supposed to simplify the process of outbound investment - but overall this measure represents a big step up in terms of Chinese government control over investments, hence the red classification of this intervention.

Other changes from previous regulation are as follows:

  • Reporting requirement before any 'substantive' work carried out on investments over USD 300m removed;
  • Any reporting documents can now be submitted directly to the NDRC, instead of having to pass local-level approval first;
  • Implementation of an online system to handle reporting to the NDRC, greatly simplifying the heretofore complex bureaucratic process.

AFFECTED SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A