China Issues New Guidelines

China’s state planner said it released new guidelines for foreign companies to invest by complying with policies on December 18. The country aimed for resolving cases of companies violating policies and indulging in unfair competition.

Meng Wei, a National Development and Reform Commission spokeswoman told in news conference that foreign private companies need to take safety measures while investing, construct contingency plans, and minimize risks.

Wei said the new guidelines were designed to aid private companies to “carry out relevant procedures both on and offshore, develop healthy competition and operate with integrity”. Moreover, these companies need to consolidate regulators’ ability to control risk by foreign firms.

Citing new guidelines, Wei added foreign companies should involve in fair competition and comply with local and overseas procedures. Companies need to consider environmental protection, develop extensive strategies, and manage finance for overseas investment. The expansion of private companies into overseas markets had been based on merit.

Citing the problems in expansion, she added, “Some enterprises’ offshore investments have also fostered problems including regulatory violations, blind decision-making, vicious competition and disregard for quality and safety management.”

In early November, Chinese government strengthened controls over overseas investment. It mandated regulatory approval for foreign acquisitions carried out via offshore entity.

According to official figures, overseas non-financial investment in China rolled down by 40.9 percent from past 10 months to October. This represents the impact of strict regulatory controls.

The new regulations are expected to facilitate foreign companies to invest without violations and involve in fair competition.