China’s government is poised to impose new restrictions on outbound foreign investment in a bid to curb capital outflows that are putting downward pressure on the renminbi and draining foreign exchange reserves, according to sources.
The State Council, China’s cabinet, will ban outbound investment deals worth more than $10bn or mergers and acquisitions above $1bn if they are outside the Chinese investor’s core business, according to two sources who have seen a draft document outlining the new rules. State-owned enterprises will also not be allowed to invest more than $1bn in foreign real estate, according to the sources.
Separately, the State Administration of Foreign Exchange, which approves conversion of renminbi into foreign exchange, held meetings with bankers in multiple cities to inform them of new approval requirements for large outbound deals, China Business News reported.