Guidelines on the Chinese overseas investments

To further direct and regulate overseas investments by Chinese enterprises and promote overseas investments to be developed in a reasonable, healthy and orderly manner, on August 2017 General Office of the State Council has reissued the “Instructions for further Guiding and Regulating the Orientation of Overseas Investments”, in which the categories of overseas investments that shall be encouraged, restricted and prohibited have been identified.

Main categories of overseas investments that shall be encouraged:

1. Overseas investments for infrastructure that is helpful to the “One Belt One Road” construction and interconnection/interworking of infrastructure in surrounding regions;
2. Overseas investments that can lead export of competitive industrial capacity, high-quality equipment and technical standards;
3. Establishment of R&D centers abroad;

Categories of overseas investments that shall be restricted:

1. Overseas investments in countries and regions that haven’t established diplomatic relations with China, those that are at war, or those in the list of restricted countries or regions according to multilateral treaties/agreements signed by China;
2. Overseas investments in real estate property, hotels, studios, sports clubs, etc;
3. Establishment of private equity funds or investment platforms without concrete business projects;
4. Overseas investments with backward production equipment that don’t conform to technical standards set by the Country of destination of the investment;
5. Overseas investments that don’t conform to the requirements for environment protection, energy consumption and safety set by the investment designation;

Before being started, the first three investments categories shall undergo the examination and approval of competent department in charge of overseas investments.

Main categories of overseas investments that shall be prohibited:

1. Overseas investments concerning the export of core technologies and products in military industry without state approval;
2. Overseas investments where technologies, processes and products that are prohibited for export by Chinese government;
3. Overseas investments in gambling industry, pornography industry and any other industry violating Chinese laws.

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