“Irrational” Foreign Investment Effectively Curbed in the First Half: Ministry of Commerce


China’s Ministry of Commerce is touting its success in curbing “irrational” outbound foreign investment in the first half of 2017.

Speaking at a press conference held at State Council Information Office on July 31 Qian Keming, vice-head of the Ministry of Commerce said that “irrational” overseas investment had been effectively curbed in H1 2017, following a 42.9% year-on-year drop of foreign direct investment to 331.1 billion yuan.

“Overseas investment has become more rational,” said Qian. “Last year the problem of a number of companies engaging in irrational overseas investment was comparatively pronounced, and with expect to this problem, we will engage in realistic compliance inspections with the relevant departments, to guide increases in a risk prevention mentality amongst enterprises that invest abroad, and expedite the health and standardised growth of outbound investment.

“H1 outbound direct investment was 331.1 billion yuan, for a drop of 42.9%, and irrational outbound foreign investment has been effectively contained.”

Qian noted that the focus of outbound foreign investment is shifting towards those nations participating in Beijing’s much-vaunted One Belt One Road initiative.

“[H1 outbound foreign investment] in One Belt One Road nations only fell 3.6%, far lower than the decline in overall outbound foreign investment,” said Qian at the less conference.

“Enterprises are focusing more on real investment, and the decline in investment in overseas manufacturing has been lower than that for the real estate, culture, health and fitness and entertainment sectors.”

Qian’s remarks come just after a slew of China’s senior-most government bodies flagged a crackdown on risky outbound foreign investment.

Wang Chunying, spokesperson for SAFE, said on 20 July that the forex regulator will closely cooperate with other departments to “effectively prevent foreign investment risk, and expedite the healthy and stale development of foreign investment.”

NDRC spokesperson and head of the policy research office Yan Pengcheng said a day previously that the relevant departments will continue to focus “irrational overseas investment” in the real-estate, hospitality, movie theatre, entertainment and fitness sectors, in order to prevent foreign investment risk.

On 13 July, Ministry of Commerce spokesperson Gao Feng said that since the end of last year the authority had worked with related departments to strengthen inspections of the veracity and compliance of outbound investments, as well as effectively curb irrational overseas investment, resulting in a large-scale decline in Chinese investment in the real-estate, hospitality, movie theatre, entertainment and fitness club sectors.

MOC flags China’s continued openness to foreign capital

In sharp contrast to the precipitous drop in outbound foreign investment in the first half, Qian reported that inbound foreign investment fell only 0.1% year-on-year to 441.5 billion yuan, and remains “essentially stable.”

“At resent international competition for capital is extremely intense, and we are thoroughly implementing several measures introduced by the State Council for expanding openness to the outside, and making active use of foreign capital,” said Qian.

“We are have worked with relevant departments to draft and issue foreign investment industry guidance catalogues and central and western region foreign investment preferred industry catalogues…further expanding the scope of entry for foreign threshold, and further strengthening the confidence of foreign-invested enterprises when it comes to expanding into China.”