Talent Spot | China Published Guidelines on Overseas Investment - Part I

China’s State Council published a set of investment guidelines (Guidelines) formulated by four key regulators – the National Development and Reform Commission, Ministry of Commerce, People’s Bank of China and Ministry of Foreign Affairs (collectively, PRC Regulators).


The Guidelines provide the most important clarification on Chinese outbound investments since late 2017, when Chinese authorities first clamped down on so-called “irrational” or “non-genuine” investments. Market uncertainty and a decline in Chinese outbound investments followed.

Significantly, the Guidelines provide official clarity by classifying overseas investments into three main categories:

- Encouraged investments;
- Restricted investments; 
- Prohibited investments.

The items in each category are broadly consistent with the Chinese government’s public and non-public communications and actions since late 2016. They also reflect what our experience shows to be China’s current economic and social policies. For example, it should not surprise market participants that Belt and Road Initiative investments are encouraged. PRC Regulators also wish to protect China’s image abroad as a responsible investor.

The Guidelines are a timely and positive development, which we expect will result in Chinese outbound investments returning to the pre-2016 levels, especially in the “encouraged” category which is likely to enjoy quicker and more efficient regulatory approvals. They represent a reassuring endorsement of China’s Go-Global initiative in the wake of recent uncertainty.

This article provides an overview of the key takeaways from the Guidelines.
-Issues Identified by PRC Regulators

PRC Regulators observed that the current international and domestic environments are undergoing profound changes, providing opportunities for Chinese companies to invest overseas, but at the same time giving rise to many risks and challenges. In the Guidelines, PRC Regulators describe the concerns informing the categorisation of overseas investments and the policy measures determined.


Some companies have not accurately understood China’s Go-Global strategy and made overseas investments without careful and systematic planning, analysis and decision-making. These investments can end up experiencing operational difficulties, resulting in significant losses. (Be more careful) 

Some companies have focussed on investments that are not part of the real economy, which not only fail to contribute to China’s economic development but also increase capital outflows. (Benefits to China)

 Some companies have not paid attention to the destination’s environmental protection, energy consumption, safety and other standards, leading to disputes that result in economic losses and damaging China’s image. (Benefits to host nation)


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