The National Development and Reform Commission (NDRC), state planner of China said that China will strengthen rules to defuse risks for domestic companies investing abroad and curb “irrational” overseas investment in its ‘One Belt, One Road’ (OBOR) initiative.
Belt and Road initiative that it would provide better guidance on risks to companies investing overseas in order to prevent “vicious” competition and corruption.
The initiative is aimed at building a modern-day Silk Road, connecting China by land and sea to Southeast, South and Central Asia, and beyond to the Middle East, Europe and Africa.
The state planner cited unspecified security risks for Chinese companies investing abroad. The NDRC did not give more details about how it planned to strengthen rules or why it was concerned about corruption and unhealthy competition between companies.
Mergers and acquisitions by Chinese companies in countries linked to the OBOR initiative have been growing at a rapid rate, even as the government takes aim at China’s acquisitive conglomerates to restrict capital outflows.
Unveiled in 2013, the OBOR initiative has also come with some security concerns for China. The largest deal in an OBOR country this year was a Chinese consortium’s $11.6bn buyout of the Singapore-based Global Logistics Properties.
Chinese acquisitions in the 68 countries officially associated with President Xi Jinping’s signature foreign policy totalled $33 billion as of Aug 14, surpassing the $31bn for all of 2016, according to Thomson Reuter’s data.
Lawyers and dealmakers had told Reuters that companies were enjoying a relatively smooth approval process for Belt and Road-related deals as regulators tended to classify them differently when reviewing outbound investments.
China has tightened outbound capital controls and cracked down on overseas deals it sees as risky, putting pressure on acquisitive conglomerates like Anbang Insurance Group , HNA Group, Dalian Wanda Group and Fosun International Ltd (0656.HK). In the statement Friday, the NDRC cited projects such as a high-speed railway in Indonesia and a crude oil pipeline between southwest China and Myanmar as examples of how the initiative was advancing.
The National Development and Reform Commission of the People's Republic of China (NDRC), formerly State Planning Commission and State Development Planning Commission, is a macroeconomic management agency under the Chinese State Council, which has broad administrative and planning control over the Chinese economy. The candidate for the chairperson of the NDRC is nominated by the Premier of the People's Republic of China and approved by the National People's Congress. Since February 2017 the Commission has been headed by He Lifeng.
The NDRC's functions are to study and formulate policies for economic and social development, maintain the balance of economic development, and to guide restructuring of China's economic system. The NDRC has twenty-six functional departments/bureaus/offices with an authorized staff size of 890 civil servants.
Any money a company or individual must pay out when conducting a transaction with another party. Outbound cash flows can include cash paid to suppliers, wages given to employees and taxes paid on income.
Breaking down 'Outbound Cash Flow'
An outbound cash flow occurs whenever you are required to pay money. The opposite of an outbound cash flow is an inbound one. For example, when a company issues bonds to raise funds, they receive an initial inbound cash flow. However, when they are required to service this debt by paying coupons on the bonds, the company will experience an outbound cash flow