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Chinese outbound investment has seen rapid growth in the last years, but recent scandals involving large conglomerates such as Anbang, HNA, and Wanda have raised concerns about the risks of ill-placed investments. To prevent companies to invest irrationally, the National Development and Reform Commission (NRDC) has released new rules on 11 February 2018 to streamline administrative procedures and strengthen regulation over outbound investment by domestic companies. 

 

Administrative procedures for Chinese Outbound Investment

 

According to the new rules, China’s national macroeconomic, industrial policies and national interests should not be threatened by outbound investment activities. Therefore, the new administrative procedures for outbound investment will firmly establish government oversight on major investment projects. This means that firms established overseas by Chinese companies will also be put under the Chinese government’s supervision. It also requires Chinese companies to report every outbound investment worth more than 300 million USD.

 

Sensitive Sectors & Countries

 

The list of “sensitive” areas for overseas investment has been updated with new sectors, which are considered by Chinese planners as detrimental to China’s national macroeconomic, industrial policies or national interests. The added sectors include real estate, hotels, cinema, entertainment, and sports clubs. Amongst already existing sensitive areas on the list are news media and armament industries.

 

A document published in August 2017 by the State Council already stated that the investment in restricted areas would be limited and that investment in other areas, such as casinos, would be outright banned.

 

Besides sensitive sectors, the new rules also include “sensitive” countries. These refer to countries which are either at war, rattled by unrest or insurgencies, do not have diplomatic relations with China or where investment by enterprises is restricted by either Chinese or international treaties (eg. international sanctions).

 

The new administrative rules and extended sensitive sectors are effective since March 2018.

 

ECOVIS Beijing is a Sino-German consultancy focusing on accounting, audit, tax, legal, and FDI advisory. For more information or questions on our services, please contact This email address is being protected from spambots. You need JavaScript enabled to view it.

 

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Richard Hoffmann

Richard Hoffmann is a partner at ECOVIS Beijing China. Richard obtained an honors degree in law and worked in Germany, the United States, and China for various prestigious law firms prior to joining ECOVIS. In addition to being a member of the board of ECOVIS International, he is Supervisor for the China business of a respected German company and shares his extensive knowledge to students by teaching commercial law in China at SRH Hochschule Heidelberg. He has published more than fifty articles in international magazines, frequently speaks at high profile events in China and abroad and is often invited as a legal expert by international TV stations. Contact: This email address is being protected from spambots. You need JavaScript enabled to view it.

Ecovis Beijing is the trusted tax and legal advisor to several embassies and official institutions in China. It specializes in mid-sized international companies and is focused on tax & legal advisory, accounting and auditing. If you’re interested in finding out more about tax and legal, don’t hesitate to sign up for our Newsletter, give us a call +86 (10) 6561 6609 or contact us directly via This email address is being protected from spambots. You need JavaScript enabled to view it.
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