China issues new rules to promote, regulate outbound investment

The Chinese Ministry of Commerce issued today regulations of overseas investment in a bid to encourage Chinese companies to be more ambitious on going international and improve their compliance with laws of host countries and their performance on corporate social responsibility.

According to the rules, the Ministry of Commerce will only review applications for overseas investment at or above 100 million USD or investment in particular countries, including those without diplomatic relationship with China and other countries on a list to be issued. Investment involving more than one country or region or investment with special purposes are also subject to the approval of the Ministry of Commerce.

Based on the number of approved applications in 2008, it is estimated that 85 percent of the application will be tackled by local commerce administrations at the provincial level, said Yao Jian, spokesman of the Ministry, today at the press conference.

Local enterprises have to apply for approval of provincial commerce offices for their projects at a minimum investment of 10 million USD but less than 100 USD, or projects in energy and mineral resources, or projects to absorb investment in China.

For a project which does not require approval of the Ministry or its provincial offices, only an application form is required and a certificate will be granted within three days. This will be the case for most investment projects, said Yao.

Enterprises will be responsible for their feasibility studies. Commerce authorities will only consider major issues that may affect the bilateral relations, the national economic security, the international obligations or fair competition.

The rules require that commerce authorities support the overseas investment by offering information services and promoting bilateral or multilateral communication and negotiations with foreign governments. Business and commerce offices of China's foreign embassies around the world are also supposed to offer suggestion on the projects.

The regulation also urges Chinese companies to fully abide by laws and regulations of the host countries and fulfill social responsibilities when expanding their business on the international markets.

Yao thinks Chinese companies still need to improve their competence in management and adaptation to local cultures. They also need to make more efforts on market research and attracting more talents who understand operation in an international environment.

More overseas investment will be conducive to balancing China's international payment in the context of China's massive trade surplus, said Yao. He released that more business delegations would be sent this year to China's major trading partners to seek for tech cooperation and mutual investment opportunities. "They are not only for exports or imports", he said.

A Chinese delegation including 20-plus enterprises from industries of chemicals, pharmaceutical, environmental protection, automobile, textiles, etc. is in Europe for investment talks.

China made more than 52.1 billion USD foreign investment in 2008, soaring 96.7 percent over that in 2007. And the revenue from contracted projects in foreign markets reached 56.6 billion USD, up by 39 percent year on year. New contract in the first two months of this year valued 23.7 billion USD, surging 68 percent despite of the global economic downturn.

Source: People's Daily Online