Talent Spot | China Published Guidelines on Overseas Investment - Part II

Three Investment Categories:
1.EncouragedOverseas Investments
“Qualified and capable” Chinese companies are encouraged to actively engage in:
- Belt and Road investments and related infrastructure and connectivity,

- Investments that export China’s quality production capacity, equipment and technical standards

- Investments that strengthen cooperation with overseas high-tech and advanced manufacturing companies – Chinese companies are encouraged to establish overseas R&D centres
- Prudent participation in resources exploration and development

- Expanding agricultural cooperation with foreign countries by carrying out mutually beneficial and win-win investments in agriculture, forestry, animal husbandry and fishery
- Investing in commercial, cultural, logistical and other services sectors in an orderly manner
- Qualifying financial institutions establishing branches and service networks abroad

2.RestrictedOverseas Investments
Chinese companies are restricted in making overseas investments that are not aligned with China’s national development, macroeconomic, international cooperation and foreign policies, including:

-Investments in real estate, hotels, film studios, entertainment, sports clubs etc.

-Establishing equity investment funds or investment platforms outside China without specific industrial projects

-Carrying out investments using outdated production equipment that does not meet the technical requirements of the destination country

Investments that do not meet the environmental protection, energy consumption and safety standards of the destination country

Investments in sensitive countries/regions with no diplomatic relations with China or that are in a state of war or chaos

- Investments that are restricted by bilateral and multilateral treaties between China and the relevant country/region

3.Prohibited Overseas Investments
Chinese companies are prohibited from making the following types of overseas investments:
Investments involving exporting core military industrial technology and products without the approval of the Chinese government

Investments involving exporting technology, crafts and products that China prohibits from being exported

Investments in gambling and lewd industries 

- Investments prohibited by international treaties to which China is party

Other investments that endanger or may endanger 
- China’s national interests and national security

Policy Measures:

1.Provide more favourable and convenient tax, foreign exchange, insurance, customs and other services for encouraged overseas investments
2.Support the development of relevant services such as legal, arbitration, accounting, tax, valuation, investment consulting and risk assessment
3.Strengthen authenticity and compliance reviews of overseas investment to prevent non-genuine investments

4.Establish a foreign investment blacklist regime and penalise illegal overseas investment activities
5.Establish an overseas investment capital regime for state-owned enterprises (SOEs)
6.Improve the overseas investment auditing regime for SOEs and safeguard the security of foreign state-owned assets

Encourage Chinese companies to:
1. Obtain in-depth understanding of overseas investment policies, regulations and international practices

2. Improve their overseas investment decision-making, financial management, legal and regulatory compliance, risk assessment, risk management and accountability systems

3. Strengthen supervision and management of their overseas subsidiaries

4. Comply with laws and regulations of the investment destination
5. Strengthen guidance and supervision of investments in high risk countries and regions, provide timely warnings about significant political, economic and social risks and put in place preventive measures.

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