On August 4, 2017, the General Office of the State Council forwarded the Opinions on Further Guidance and Regulation of the Direction of Outbound Investment (the “Opinions”) of the National Development and Reform Commission, the People’s Bank of China, the Ministry of Foreign Affairs. The purpose is to provide further guidance and regulation regarding the direction of outbound investments by enterprises, encourage such enterprises to reasonably and orderly develop their outbound investment activities, prevent and respond to outbound investment risks, promote continued and healthy development of outbound investment, realize win-win situations and joint development with countries where outbound investments are made.
The Opinions mainly focus on supply-side structural reforms based overall on the One Belt One Road initiative to further push for “streamlined administration, delegation of powers and optimization of services”. The Opinions further specify the three categories of outbound investment activities that are encouraged, restricted or prohibited through the use of “promotion of development and negative lists” to guide and regulate the direction of outbound investment. The six categories of outbound investments that are encouraged are those in infrastructure, production capacity and equipment, high/new tech and advanced manufacturing, energy resources, agriculture, and service industries, and enterprises that have the capability and qualifications to stably move into outbound investment in those categories are encouraged to do so. The restricted category primarily covers the ongoing outbound investment activities in real estate, hotels, entertainment, sports clubs, etc., for which the relevant competent authorities will implement regulatory approvals, as well as set specific restrictions on the use of outdated equipment and other outbound investments that do not meet the environmental, energy consumption, and safety standards of the invested countries. Prohibited outbound investments include those involving core military technology and product export that has not been approved by the state; the use of technologies, processes and products whose export is prohibited; investments in the gambling industry, the pornographic industry, and those that are prohibited by international treaties executed or participated by China; as well as other outbound investments which may jeopardize national interest and national security.
The Opinions require categorized guidance, improved administrative mechanisms, enhanced service and strengthened security protections. Each region and department is required to concretely strengthen organizational leadership and coordination, set out responsibilities, formulate appropriate measures and policies on a timely basis, and thoroughly carry out the relevant tasks to ensure actual efficacy.