Abstract The news that Chinese companies went to the European and American markets to buy, buy, and buy headlines seems to be yesterday. Today, the hands of supervision have begun to select those “naughty†arbitrage capitals to guide investment toward the real economy. ...
The news that Chinese companies went to the European and American markets to buy, buy, and buy headlines seemed to be yesterday. Today, the hands of the regulators have begun to select those “naughty†arbitrage capitals to guide investment toward the real economy. Since the beginning of this year, with the continued depreciation of the RMB against the US dollar, the scale of foreign exchange reserves has also been declining. Chinese regulators have gradually tightened approvals and controlled capital outflows, which has cooled down on China's foreign investment, which has been popular all the way last year.
The hands were guided by the hidden window at the beginning of the year. At the beginning of this month, the Ministry of Development, Reform, the Ministry of Commerce, the People's Bank of China, and the Foreign Exchange Bureau issued a circular public notice. The regulatory authorities have closely followed the recent real estate, hotels, cinemas, entertainment, sports clubs. Some irrational foreign investment tendencies appear in other fields.
In fact, Chinese companies with large-scale overseas investment generally need to pass the three thresholds of these four departments: filing and approval, project feasibility (commonly known as roads), and bank exchange quotas.
Zhou Liujun, director of the Department of Foreign Investment and Economic Cooperation of the Ministry of Commerce, described the First Financial Journal reporter for more than a month during the National Business Work Conference on the mentality of screening for overseas investment projects.
"We want to make good children go more stable and healthier." He said, "The authenticity audit we conducted is not an approval, but a (business) pre-investment, (to them) to do a physical examination."
Explain how to identify arbitrage capital
According to the current regulations, the main investment of enterprises in the Ministry of Commerce is contract filing and approval. When talking about the original intention of authenticity review, Zhou Liujun emphasized that China's foreign investment should pay more attention to the real economy, guide enterprises to invest in the real economy, let enterprises expand international development space, and invest in technology, brands, channels and markets.
Zhou Liujun said that in the authenticity review, they found that there are some large-scale investments, irrational investments, and “mother and child†in some non-main areas.
“The physical examination requires indicators, and we mainly review it in the form of naturally occurring materials,†he said.
For example, if a company intends to invest overseas, it is certainly not a temporary decision. It should invite a credible intermediary to conduct due diligence and form a report on market share and development level analysis.
If a listed company invests overseas, there will be materials for decision-making by the board of directors, then the original minutes of the board meeting need to be provided, as well as the most recent audited financial statements for half a year and quarter.
"We will focus on the debt ratio, not owe domestic debts, and invest abroad." Zhou Liujun said, "We will look at the source of funds, financial status, and remind companies to make prudent decisions."
After providing all of the above materials, companies must make a commitment to the authenticity of the materials they provide. "Don't underestimate this commitment. This is a manifestation of corporate credit as a corporate. If you promise, we have an afterthought (regulatory)." In the after-the-fact supervision, he introduced, in particular, the local economic and trade organizations of the Ministry of Commerce are providing In addition to the service, it will also help to follow up whether the investment is real.
"For example, if a company invests in manufacturing, but it does not move for a year or two, the funds go out. The participating agencies will follow up. Is this difficult, do you need help and coordination?" Zhou Liujun said, in fact If the materials are provided in a complete and reasonable manner, including some M&A projects, they will be closed soon after acceptance.
In Zhou Liujun's view, advancing legislation and promoting institutional design at the national level is the next step. He told the First Financial Reporter that the Ministry of Commerce will promote the introduction of the "Regulations on Overseas Investment", study and formulate policies to strengthen overseas investment management, and do a good job of authenticity review. It will also promote the "Opinions on Strengthening Post-event Supervision in Foreign Investment and Cooperation", strengthen the "going out" compliance review and coordination of large overseas projects, improve the construction of corporate credit system, and conduct statistical work evaluation of foreign direct investment.
Zhang Xiangchen, deputy representative of the International Trade Negotiation of the Ministry of Commerce, reminded the “going out†in the annual meeting of the China International Chamber of Commerce in the past few days that although it is a double-digit growth, 20,000 companies have carried out internationalization, but developed There are still very few transnational corporations in the true sense of the country, and there is a big gap between the strength and management level of enterprises.
From the perspective of development efficiency and quality, he believes that there are some companies that are blind in going out. There are indeed some companies that are not able to “go outâ€, and some enterprises are not standardized, giving the company a reputation and production management. It has an impact and needs to be highly valued.
Gradually tightening capital outflow regulation
Over time, the situation of Chinese consumers and enterprises “buying, buying and buying†in developed markets has quietly changed.
Looking at the increased demand for insurance purchases from the Mainland to Hong Kong, Ms. Chen, a Hong Kong resident, has just qualified for insurance brokerage in October, but she has recently been depressed. She found that mainland customers who used UnionPay in Hong Kong could not swipe their cards. If you want to open an account that can be invested in Hong Kong in the Mainland, you have to queue at least a few months. "Obviously, the policy is tightening the flow of personal funds."
Behind this, after the exchange reform of the “8·11†last year, it is not unrelated to the continued depreciation of the RMB against the US dollar. From August 10, 2015 to December 27, 2016, the depreciation of the central parity of the RMB against the US dollar was 11.95%. Under this trend, some people with assets have already transferred some of their RMB funds overseas to avoid the risk of asset depreciation that may result from falling exchange rates.
Liang Guoyong, an official of the UNCTAD Investment Division, has been tracking China's cross-border investment situation. He analyzed the first financial reporters, after the 2008 financial crisis and the European debt crisis in 2010, the economic situation of developed countries has greatly suppressed the asset prices, especially real estate, while China is just the opposite. In recent years, in the face of rising domestic asset prices and declining income levels, the attractiveness of overseas markets has increased, and overseas investment operations have become an important part of some companies' business strategies.
In addition to manufacturing, similar changes are more apparent in service industries such as finance and real estate, as well as diversified companies or investment groups.
Subsequently, correspondingly, as of November 30, 2016, China's foreign exchange reserves amounted to 3.05 trillion US dollars, a decrease of 69.1 billion US dollars from the end of October, a decrease of 2.2%. This is the fifth consecutive month of decline in foreign exchange reserves, and the largest decline since January this year, a decline of $ 99.5 billion in January.
In addition to personal overseas asset allocation, several service companies doing cross-border investment lawyers told the First Financial Reporter that starting from April and May this year, each month has a certain exchange of foreign exchange quotas, this is an unwritten rule. This kind of window-guided quota opinion has also been confirmed in the mouths of other financial institutions such as banks.
According to reports, from the existing experience, the overseas investment of financial enterprises can be approved by the direct competent department. If a non-financial enterprise invests abroad, it must pass the approval or filing of the development and business system. It can be done simultaneously or separately. The NDRC pays attention to the macro management of the project and whether it conforms to the macro-control of industrial policies. The investment certificate of the Ministry of Commerce mainly considers the amount of foreign capital invested by Chinese capital and the industry. However, under normal circumstances, enterprises must obtain an investment certificate from the commercial department before they can go to the foreign exchange bureau to purchase foreign exchange. Other special circumstances may involve the centralized declaration of the operators in the anti-monopoly field and the disclosure of information of listed companies. The former is managed by the Ministry of Commerce and the latter by the CSRC.
"In the previous practice, SAFE only recognized the investment certificate of the Ministry of Commerce. However, now that foreign exchange is tightening, development and business are all needed, and now many customers have encountered problems with their funds leaving the country," said one lawyer.
Zhao Zhongxiu, vice president of the University of International Business and Economics, analyzed the first financial reporter: "This is a matter of government. Many foreign investment is actually a transfer of wealth and accelerate the reduction of foreign reserves."
From January to November 2016, Chinese enterprises realized a total of foreign direct investment of 161.7 billion US dollars, exceeding the 2015 full-year level, an increase of 55.3%.
Zhou Liujun said: "The next step, we hope that companies will boldly go to the international stage, enhance competitiveness on a global scale, enhance the industrial chain and value chain, and contribute to the global economic recovery."
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