11 May, 2018
China’s phenomenal rise as one of the world’s top global investors has created many opportunities for sellers around the world. However, there has been a recent dip in Overseas Direct Investment ("ODI") by Chinese investors. In 2017, outbound M&A from China declined by 5% in volume and 39% in value from the record 2016 levels.
This drop was largely driven by China’s constraints on capital leaving the country about which we have written recently China's new foreign exchange controls create fresh concerns although recent practice suggests that there has been some relaxation in these, with a new unofficial US$100m threshold for triggering the 'compliance and genuineness' review referred to in the note.
This note examines the existing approval regime for ODI by Chinese companies, focusing on recent regulatory changes, as well as market practice in resolving PRC approval and capital control-related issues.
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