China is one of the strongest countries to enjoy widespread trade in the overseas market. China has a detailed outbound investment policy, which they have been following for a long time. However, for more details, you can check AsiaTimes. But recently in the month of March in the previous year, China had opted for some new regulations for more profitable operations in foreign countries.
These rules were molded by the Chinese National Development and Reform Commission (NDRC). These reformations were made with careful planning and acute calculation.
Beijing has also imposed a 36 – point code of conduct for the private firms to abide by when operating any overseas transactions. This has kind of clipped the wings of the strongest global dealmakers in China. Not only this, it has posed as a barrier for those overseas investors who so long had enjoyed the bank guarantees of China to secure their loans. Thus, it will help put an end to the unnecessary outflow of money from the country.
One interested in getting engaged with China in their foreign investment should be thus well aware of these new inputs and alterations in the policies.
Firstly, the NDRC had made it a point to keep a record of the outgoing operations as well as the incoming operations for which they asked the Chinese firms to report each and every transaction in the means of a newly constructed information system which will both be online and also be headed by the government. This will help them in keeping a clear account of the wastage and the advantage of finance.
Secondly, this institution has announced that all Chinese overseas transactions with ‘sensitive’ countries and industries should first be approved by the country’s highest planning agency Beijing. They have decided sensitive countries as those who are engaged in some civil war or those sharing a diplomatic relationship with China. As for the sensitive industries, they have put their finger on those industries which are involved in manufacturing weapons and also related to the media arena.
If an overseas investment attains a valuation of somewhat US$300 million or more then the deal needs to be registered to be with the NDRC, such deals are known as non-sensitive deals. But there are deals whose valuation does not rise up to such heights; such deals need to be registered with the local authorities.
The last but not the least, regulations are the “Belt and Road” initiative which Beijing is following to establish a cordial and a firmer relationship with foreign countries. It is also trying to establish a balance between supporting this cause on the one hand and trying to stop an unbridled mass departure of capital.
The outputs of these policies are yet to be recognized. But it has been agreed that the measures that were taken in this new policy look far more promising and foolproof. Especially when it comes to affecting the Chinese economy and politics. Beginning from their ‘one belt one road’ initiative to investing in advanced and technology and manufacturing China has made some quite convincing and commendable decisions that they are sure will promote their business skills as well as take up their incoming profit.
These are the most important and noticeable changes that have been in 2018’s policy; there may also be some minor changes that do not actually make a huge difference. We expect that these new sets of rules will definitely yield China much profit since one of the major decisions was to stop ‘irrational’ money laundering, even if not immediately, then at least in the long run.