China economy

China to step up supervision of overseas investment risks, insurance regulator says

Industry watchdog says it will focus on irrational stock market fundraising and overseas acquisitions

PUBLISHED : Monday, 18 September, 2017, 2:43pm
UPDATED : Monday, 18 September, 2017, 10:48pm

China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.

China has cracked down this year on “irrational” overseas investment, which it suspected was one way of disguising capital flight as the yuan weakened.

While the currency has staged a sharp turnaround in recent months and outflows have dwindled, authorities have shown no signs of easing their campaign. The State Council said last month that China would limit overseas investment in property, hotels, entertainment, sports clubs and film industries.

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The China Insurance Regulatory Commission would step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the commission’s finance and accounting department.

“The regulator will prevent risks stemming from an excessively rapid growth in overseas investments, via window guidance from authorities and stepped-up information disclosure,” he said.

Some overseas investments have been derailed due to heightened official scrutiny. Dalian Wanda Group said last month it had scrapped plans to buy Nine Elms Square in London, the latest setback for the Chinese conglomerate.

The insurance regulator would also urge insurance companies to conduct self-checks on their property investments, Guo said.

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It would continue to strictly control insurance money from flowing into property markets and prohibit funds to directly or indirectly invest in commercial buildings, he added.

Guo also said that the regulator would prevent risks stemming from peer-to-peer lending and internet finance from spilling over onto the insurance industry.

Peer-to-peer platforms help to connect individual or institutional investors looking to invest their cash with borrowers including small- and medium-enterprises, students and other individuals that need funding.