Concrete Analysis | Chinese investment push abroad to gain from simplified approvals

The new administrative measures for outbound investment issued by the Ministry of Commerce came into effect on October 6. The new measures, replacing regulations from 2009, are another significant step in the Chinese government's "go abroad" investment policy.

They will streamline the regulatory process for outbound investment in "non-sensitive" sectors such as real estate. Although certain approval and filing requirements still remain, they will no doubt further boost the fast-growing flow of outbound real estate investment.

Approval by the ministry is now only required when the outbound investment is in a "sensitive" country or industry. This streamlining is in line with a regulation issued earlier this year by the National Development and Reform Commission.

"Sensitive" countries and regions include those that do not have diplomatic ties with China or that are subject to United Nations sanctions. "Sensitive" industries are defined as those subject to China's export control regime and where the investment affects more than one foreign country's interests.

Acquisition of a real estate asset or operating platform in developed countries such as the United States, Britain and Australia should no longer require approval. Instead, Chinese outbound investors are now required to complete a simplified filing process with the ministry or its local bureaus.

Take a Chinese company based in Shanghai that plans to acquire a hotel in Paris for US$1.5 billion. It now only needs to make a simplified filing with the ministry's Shanghai bureau.

If the filing documents are complete and accurate, the bureau will then issue a "certificate of outbound investment" to the company within three working days. Previously, as the investment exceeds US$1 billion, the company would have been required to go through a full-blown approval process.