See what China says about its capital outflow restrictions

News started telling that China is tightening its foreign exchange rules to restrict money outflow from the beginning of this year or late last year, and recently, we saw an explosion of internet discourse on this topic. Many panic.

Right, China is worried about its capital outflow which will surely have adverse impact on China's economy which is struggling to restructure itself to gear up to a more self-sustaining and less-investment-driven growth mode.

China development and reform commission, ministry of commerce, People's Bank of China and China State Administration of Foreign Exchange have responded to the market unease by a reply on November 28 to question raised by reporter:

问:有记者问,对当前对外投资形势如何看?需要坚持什么样的对外投资方针政策?

Q: how do you view the current situation of outbound investment? what policies should be kept in place?

答:近年来我国对外投资保持较快发展,取得了显著成效,为深化我国与各国互利合作、促进国内经济转型升级发挥了重要作用。

A: Recent years, China has seen rapid development in outbound investments achieving an obvious success, and contributing greatly to the international mutual cooperation and domestic economic restructuring.

中国对外投资的方针政策和管理原则是明确的,即坚持实施新一轮高水平对外开放,坚持实施“走出去”战略,坚持企业主体、市场原则、国际惯例、政府引导,坚持实行以备案制为主的对外投资管理方式,把推进对外投资便利化和防范对外投资风险结合起来,规范市场秩序,按有关规定对一些企业对外投资项目进行核实,促进我国对外投资持续健康发展,实现互利共赢、共同发展。

China is clear with its outbound investment policy and management, namely, insisting on a higher level of opening up, insisting on "going out" strategy, insisting on Enterprise participating, market principle, international practice, and government guiding, insisting on the filing system management for outbound investment, combining the facilitation of outbound investment and prevention of outbound investment risks, and standardizing market order. We verify some outbound investment projects by some enterprises in accordance with relevant regulations, boosting the healthy development of outbound investments and realizing mutual benefits and mutual development.

Then on December 6, 2016, the four departments again posted another reply to report that China is tightening outbound investment:

问:有消息称,当前对外投资形势下中国相关部门将加强对外投资监管。请问对此有何评论?

Q: News said, China is tightening up supervision and management of outbound investment, what are your comments?

答:我国对外投资的方针政策和管理原则是明确的,我们鼓励企业参与国际经济竞争与合作、融入全球产业链和价值链的方针没有变,坚持对外投资“企业主体、市场原则、国际惯例、政府引导”的原则没有变,推进对外投资管理“简政放权、放管结合、优化服务”改革的方向也没有变。我们支持国内有能力、有条件的企业开展真实合规的对外投资活动,参与“一带一路”共同建设和国际产能合作,促进国内经济转型升级,深化我国与世界各国的互利合作。同时,监管部门也密切关注近期在房地产、酒店、影城、娱乐业、体育俱乐部等领域出现的一些非理性对外投资的倾向,以及大额非主业投资、有限合伙企业对外投资、“母小子大”、“快设快出”等类型对外投资中存在的风险隐患,建议有关企业审慎决策。对外投资管理机制是我国开放型经济体制的重要组成部分,我们将把完善中长期制度建设和短期相机调控结合起来,在推进对外投资便利化的同时防范对外投资风险,完善和规范市场秩序,促进对外投资健康有序发展,保持国际收支基本平衡。

Q: China's clear with its outbound investment policies and managements, and still maintains the directive of encouraging our enterprises to participate in international competition and cooperation and getting involved in global industrial and value chains, and still insists on the principle of "Enterprise participating, market principle, international practice, and government guiding, and we still keep on reforms to further simplify, supervise and serve outbound investment. We support domestic competent enterprises to carry out genuine and compliant outbound investment, taking part in the construction and international production capacity cooperation, prompting deeper economic restructure at home, and deepening mutual cooperation between China and the world. At the same time, supervising departments are watching the risks associated with the irrational outbound investments in sectors such as real estate, hotels, cinemas and entertainment and sports and clubs, and big investment projects out of line with its main business, outbound investment by LLP, "small parent big son", "fast in and fast out" and similar projects, and suggested enterprises to make prudent investment decisions. Administration regime of outbound investment is an important part of China's open economy system, and we will combine the long-term regime and short-term control to contain risks while pushing forward outbound investment, and perfect and regulate market orders, boost healthy development of outbound investment and keep international inflow and outflow in balance.

Jason Tian

Jason Tian, specializes in foreign-related legal services ranging from foreign investment in China, banking and capital, real estate, M&A, corporate, international trade, estate planning, inheritance and divorce at his blog: http://www.sinoblawg.com.

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