New Rules Being Mulled to Boost China Outbound Investment

March 23, 2015

The outflow of Chinese capital has had a huge impact on global markets and the process of investing will likely become much easier in the future, according to a recent statement by central bank Deputy Governor Yi Gang.

 

Focus on Individual Investment

 

At a recent forum in Beijing, Gang said that, ‘in the near future, we can consider an arrangement’ that will allow individuals to freely invest sums of $1 million to $2 million overseas. Currently, individuals may only invest the equivalent of $50,000 annually through the government-controlled Qualified Domestic Institutional Investor program.

 

Liberalization Process to Continue

 

Making these policy changes would be the latest step in a process of deregulation and liberalisation that has seen controls lifted on the amount of money and the kinds of projects that Chinese companies have been able to invest overseas. 

 

Supportive of Ongoing Trends That Has Driven $870 Billion Overseas

 

This process has resulted in seven consecutive annual increases in total outbound investment. In 2014, outbound investment in real estate alone totalled $16.5 billion, up 46.5% y-o-y, according to real estate firm Jones Lang LaSalle. By the end of 2014, China’s investments across all sectors had reached a total of $870 billion, according to data released by the Heritage Foundation.

 

China's Outbound Investment, 2005-H1 2014

 

 Source: Heritage Foundation: China Outbound Investment Tracker

 

With China’s changing policy regime, growing appetite for investment options outside of the domestic market and increasing desire to spread its influence globally, we can expect further growth in outbound investment across a range of sectors. 

 

Links:

 

APAC Trends: China's Real Estate Spend Tops $16.5 Billion, Up 46.5% YoY

 

Business Insider: Statistics on China's Outbound Investment

 

OMM: New Rules to Facilitate China Outbound Investment

FT: China Loosens Rules on Pension Fund Outbound Investment

 

Outlaw: New Rules Ease Controls on Outbound Investment

 

 

 

 

 

 

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