CHINA is expected to introduce its first regulation on overseas investment this year.

    The regulation, initiated by the Ministry of Commerce and National Development and Reform Commission, will provide guidance on investment in other countries and regions, while identifying the industries that the government will encourage or ban.

    As the first regulation on overseas investment, it will integrate existing rules and define overseas investment, approval procedures, financing, profit sharing and tax policies.

    Investment that brings good social and economic benefits and conforms to the Belt and Road Initiative will be encouraged, while blind and irrational investment will be discouraged and strictly regulated.

    The regulation will punish investors who violate domestic and foreign law.

    Commerce Minister Zhong Shan said March 11 that a small number of Chinese companies had invested overseas “blindly and irrationally” in investment China does not encourage.

    The State Administration of Foreign Exchange has said the government will more closely monitor “irrational” investment in property, entertainment, sports and other sectors.

    People’s Bank of China Deputy Governor Pan Gongsheng said last week that some companies transfer assets overseas out of the country via outbound investment.

    China’s outbound investment has seen rapid growth in recent years and surpassed foreign investment in the country. As of the end of 2015, 20,000 Chinese investors had established 30,000 overseas firms and the total amount of foreign assets reached US$4.4 trillion.

    The nonfinancial outbound direct investment (ODI) in 2016 soared 44.1 percent year on year to US$170 billion, according to official data.

    The figure fell 52.8 percent in January-February this year from the same period last year, with amounts in the property and entertainment sectors down over 80 percent.

    At present, China has only a patchwork of lower-level regulations from various ministries to govern outbound investment. Liang Guoyong, an economic affairs officer at the United Nations Conference on Trade and Development, said the new, higher-level law will help resolve new problems in outbound investment, and effectively protect overseas commercial interests.

    (SD-Xinhua)