China said it will ban or closely monitor overseas investments by state-owned firms in certain sectors, the latest move in a government fight to stem capital flight and what it has called “irrational” spending abroad.
The the Chinese State-Owned Assets Supervision and Administration Commission, which manages the country’s 102 state-owned giants, plans to draw up a list of sectors that will either be off-limits to investment by state-owned enterprises (SOE) or under strict supervision, according to a government statement on Wednesday.
The notice by the agency gave no details on what sectors would be singled out, nor any timing.
However, the state-run China Daily yesterday reported that the list would include heavily polluting industries or those vulnerable to global commodity price fluctuations, such as business related to energy, mining, real estate and the oil sector.
It quoted commission Vice Chairwoman Huang Danhua (黃丹華) as saying the government will seek to encourage SOE overseas investment in sectors including high-speed rail, roads, telecommunications and nuclear power.
Overseas direct investment last year surged 44 percent to 1.13 trillion yuan (US$165 billion at current exchange rates), surpassing inward investment of 813.2 billion yuan, according to Beijing, as Chinese companies went on a worldwide spending spree across a range of sectors.
In one of the largest moves, China National Chemical Corp (中國化工) made a US$43 billion bid for Swiss giant Syngenta AG that is awaiting approval by EU regulators.
The tide of outgoing investment has alarmed authorities, who are grappling with slowing economic growth, capital flight and the weakening yuan, which is close to eight-year lows against the US dollar.
Chinese authorities have responded by urging domestic companies to avoid “irrational” overseas investments and tightening screening of such plans while also announcing a number of measures aimed at attracting more foreign investment to China.
Stephen Garrett, a 27-year-old graduate student, always thought he would study in China, but first the country’s restrictive COVID-19 policies made it nearly impossible and now he has other concerns. The cost is one deterrent, but Garrett is more worried about restrictions on academic freedom and the personal risk of being stranded in China. He is not alone. Only about 700 American students are studying at Chinese universities, down from a peak of nearly 25,000 a decade ago, while there are nearly 300,000 Chinese students at US schools. Some young Americans are discouraged from investing their time in China by what they see
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