China issues guidelines on overseas investments
On 18 August 2017, as part of the Chinese government’s ongoing efforts to regulate overseas investments by Chinese companies, China’s State Council published a set of investment guidelines (Guidelines) formulated by four key regulators – the National Development and Reform Commission, Ministry of Commerce, People’s Bank of China and Ministry of Foreign Affairs (collectively, PRC Regulators). The Guidelines provide the most important clarification on Chinese outbound investments since late 2016, when Chinese authorities first clamped down on so-called “irrational” or “non-genuine” investments. Market uncertainty and a decline in Chinese outbound investments followed. Significantly, the Guidelines provide official clarity by classifying overseas investments into three main categories, namely encouraged investments, restricted investments and prohibited investments. This Guidelines are a timely and positive development, which we expect will result in Chinese outbound investments returning to the pre-2016 levels, especially in the “encouraged” category which is likely to enjoy quicker and more efficient regulatory approvals. They represent a reassuring endorsement of China’s Go-Global initiative in the wake of recent uncertainty. This article provides an overview of the key takeaways from the Guidelines.