SHANGHAI (Reuters) - China will ease restrictions on overseas investments by local firms and deals below $1 billion will no longer need approval, the country's economic planner said in another step to cut red-tape and facilitate the growth of private investment.
Starting from May 8, Chinese firms planning to invest less than $1 billion will only need to register with authorities rather than seek approvals from the National Development and Reform Commission (NDRC), the commission said in a statement late on Thursday.
In a series of sweeping reforms published in November, China
promised to free up the market by simplifying administrative controls and to restrict central government management of microeconomic issues.
Lengthy approval times, which can take up to six months, have dented the competitive edge of privately-owned Chinese firms in their overseas acquisitions, since other foreign companies can adjust to changes in economic conditions at a much quicker pace, analysts have said.
Overseas targets are often also reluctant to work with non-state Chinese firms due to uncertainties on whether regulators would reject the investment applications.
The NDRC said the new rules do not apply to investment projects in "sensitive countries, regions or sectors."
The relaxation of rules also comes as Beijing is pushing its companies to venture abroad and is seeking to diversify its $4 trillion foreign-exchange reserves investments.
Currently, overseas resource-related investments above $300 million are subject to approvals by the NDRC, while the threshold for deals in other sectors is capped at $100 million.
Deals of above $1 billion will still need the approval by the NDRC, while those valued at $2 billion and above will need the approval of the State Council, China's cabinet, according to the new regulations.
Among other improvements aimed at reducing red-tape, the NDRC also promised to complete investment reviews and issue a decision within 20 days of receiving the application.
The relaxation of overseas investments comes as Beijing takes incremental steps to loosen its capital account in line with a reform agenda that seeks to let market forces play a bigger role in the economy.
China said on Thursday it will allow cross-border stock investment between Shanghai and Hong Kong, a small step towards opening China's capital account and letting Chinese individuals buy foreign equities overseas.
China's non-financial outbound foreign direct investment rose 17 percent in 2013 to $90.2 billion, according to Ministry of Commerce data.
(Reporting by Lu Jianxin and Fayen Wong; Editing by Shri Navaratnam)
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