China will further strengthen oversight of offshore investment by state-owned companies to clamp down on a rising flow of money out of the country.
The State Council, China’s cabinet, in a statement Wednesday pledged to gradually establish a “normalized” scheme to supervise and inspect offshore financing and investment activities by state firms, including any shareholding changes in overseas companies, the Wall Street Journal reports.
The cabinet said the purpose of the measures is to ensure safe operation of state assets and enhance return on investment.
Beijing has ramped up efforts to control the movement of money offshore.
An increase in outflows in recent weeks has complicated efforts by Beijing to shore up the yuan and is adding to uncertainty about the resilience of the world’s second largest economy.
The cabinet’s statement comes amid evolving plans to place stricter controls on efforts by Chinese companies to invest overseas and prevent such transactions from being used as a cloak for capital flight.
Government agencies are being ordered to scrutinize a range of deals and investments by state-run and private companies, sources told the Wall Street Journal earlier.
Under the current rules, companies trying to undertake many transactions in foreign markets only need to register with the authorities and don’t have to go through any lengthy approval process.
Several government agencies have issued public statements this week to flag the greater scrutiny. The foreign-exchange regulator chimed in Wednesday, pledging to step up efforts to authenticate outbound investments and crack down on fake overseas transactions.
Chinese companies have quickened their pace of overseas investments this year.
Non-financial firms’ outbound direct investment increased 53.3 percent compared with a year earlier in the January-October period to US$145.96 billion, the commerce ministry said last week.
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