China puts brakes on overseas spending spree

BEIJING - Agence France-Presse

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Beijing is tightening screening on Chinese companies’ overseas investments, according to the government and reports, after a record-setting shopping spree raised concerns of capital flight and reckless spending.

Authorities will “combine facilitating foreign investment with guarding against investment risks” by scrutinizing proposed deals, said a statement posted on the website of the National Development and Reform Commission, the top economic planner, without giving details.

New restrictions will ban most deals over $10 billion and curb investments of more than $1 billion in sectors unrelated to a company’s core business, Bloomberg News reported, citing people with knowledge of the matter.     

State-owned companies will be barred from spending more than $1 billion on overseas property and the rules will last until September 2017, it added.

Chinese firms have been on a multi-billion-dollar spending spree this year, culminating in state-owned ChemChina’s $43 billion bid for Swiss seed giant Syngenta.

Property-to-entertainment conglomerate Wanda Group bought Hollywood studio Legendary for $3.5 billion, appliance giant Midea took over leading German robotics firm Kuka for $5 billion, and insurer-turned-hotelier Anbang paid $6.5 billion for 16 luxury properties from hedge fund Blackstone.     

The tightening comes after authorities long urged private and state-owned enterprises to “go abroad” to buy foreign brands, technologies and resources in search of better returns and technological know-how.  
  
But increasing capital outflows from China have raised concerns with the yuan currency weakening against the dollar, hitting a nearly eight-year low this month.