New | New rules to boost investment overseas
Mainland firms will not require government approval for foreign investments under US$1b, marking a significant easing of regulations
Analysts have hailed the central government’s recent easing of rules on overseas investments as a major boost for the ambitions of outward-looking mainland companies.
“This is a very big change and it will lead to more outbound investments,” said Amanda Yao, a partner at British law firm Pinsent Masons.
Carson Wen, a partner at US law firm Jones Day, also sees the benefits from a more streamlined process. “Hitherto the need to obtain government approvals has been a major obstacle to Chinese companies successfully acquiring offshore targets,” Wen said.
On December 2, the State Council promulgated a “Catalogue for Investment Projects to be Approved by the Government”. According to the document, any outbound investment below US$1 billion that does not involve sensitive countries or industries will not require approval by the National Development and Reform Commission (NDRC).
Previously, an outbound investment of more than US$100 million in any non-resource project required the NDRC’s approval at the central government level, said Cindy Pan, a lawyer at international law firm Dentons. For resource projects, outbound investments over US$300 million previously needed NDRC approval at the local government level, said Pan.
This policy change seems particularly helpful for Chinese investors to invest in the United States and Europe
Mao Tong, a partner at US law firm Squire Sanders, said: “The latest relaxation is quite significant. Increasingly, many outbound investments from China now require more than US$100 million.