China says to ease restrictions on overseas investments

SHANGHAI Fri Apr 11, 2014 9:02am IST

People rest at a park overlooking the Macau peninsula March 17, 2014. REUTERS/Bobby Yip/Files

People rest at a park overlooking the Macau peninsula March 17, 2014.

Credit: Reuters/Bobby Yip/Files

Related Topics

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)

FILED UNDER:
Photo

After wave of QE, onus shifts to leaders to boost economy

DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.

OBAMA'S VISIT

Reuters Showcase

Coal Mining

Coal Mining

India to open coal to commercial mining firms soon, minister says  Full Article 

RBI Loan Rules

RBI Loan Rules

RBI relaxes overseas loan recast rules   Full Article 

E-commerce Firms

E-commerce Firms

Amazon, e-commerce rivals fuel commercial property boom in India  Full Article 

Growth Forecasts

Growth Forecasts

Indian economic growth forecasts pegged back, despite rate cuts: Reuters Poll.  Full Article 

Uber is Back

Uber is Back

Uber back in Delhi; govt says must await approval.  Full Article 

Markets at Record

Markets at Record

Sensex rises to record after ECB stimulus programme.  Full Article 

Pharma Sector

Pharma Sector

Ipca Labs hit by FDA ban on plant for standard violations.  Full Article | Related Story 

Forex Reserves

Forex Reserves

India FX reserves at record high as RBI fortifies defences  Full Article 

QE for Euro Zone

QE for Euro Zone

ECB launches 1 trillion euro rescue plan to revive euro economy.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage