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Beijing - China plans to implement sweeping curbs on overseas dealmaking by the nation’s companies, people with knowledge of the matter said, as a record outbound acquisition spree puts pressure on its currency to weaken.
Regulators will generally bar overseas investments of $10bn and above, while leaving room for some strategic deals to be executed, the people said.
That will also apply to foreign property investments of at least $1bn by state-owned enterprises, as well as take-privates of overseas-listed Chinese companies using onshore capital, according to the people, who asked not to be identified because the information is private.
The curbs will last until the end of September 2017, the people said, adding that the rationale for the measures wasn’t explained in detail. Regulators will pay extra attention to deals by highly leveraged firms and companies with poor return on assets, according to the people.
China will also restrict overseas investments of at least $1bn in industries outside a buyer’s core business, according to the people. Stake purchases of less than 10% in an overseas-listed company, as well as Chinese companies’ subsidiaries doing overseas acquisitions valued at more than their parent company, also will be curbed, the people said.
The State Council will issue guidelines on the curbs, at which point it will ask government agencies to draft more detailed rules on implementation, according to the people.
China’s top economic-planning body, the National Development and Reform Commission, didn’t immediately reply to faxed questions. The Wall Street Journal reported the measures on Friday, citing unidentified people and documents reviewed by the newspaper.
The government will review some companies’ outbound investment projects in accordance with related rules, according to a report Monday from the official Xinhua News Agency posted on the NDRC’s website.
China will stick to its “go global” strategy and the current management policy, which mainly relies on a registration system for outbound investments, the Xinhua report said, citing a joint comment from the NDRC and three other government bodies.
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