(MENAFN- The Peninsula) AFP
Beijing: China is to restrict foreign investments in sports clubs, real estate and entertainment and is banning investment in pornography and 'unauthorised military technology.
The new rules were announced Friday by the government which had previously encouraged overseas spending sprees, but then warned late last year of 'irrational acquisitions amid fears that powerful conglomerates were racking up dangerous debt levels.
The announcement came days after British football club Southampton said it had entered into a partnership with Chinese businessman Gao Jisheng, with press reports saying he and his family had paid £200m ($259.5m) for an 80 percent stake.
'Foreign investments that do not conform to China's efforts towards peaceful development, mutually beneficial cooperation and to macroeconomic regulation are subject to restriction, said the government, adding it wanted to 'prevent risks.
Chinese firms will no longer be able to invest in conflict zones and places that do not have diplomatic ties with China.
The rules also ban investments that could harm the country's interests and security. High-profile Chinese deals in recent years have grabbed the limelight including Fosun's takeover of Club Med, HNA's stakes in Deutsche Bank and Hilton hotels, Anbang's purchase of New York's historic Waldorf Astoria, and Wanda's control of Hollywood studio Legendary Entertainment and 20 percent of the Atletico Madrid football club.
But authorities now appear to be concerned about the influence of these conglomerates, their mazes of subsidiaries and debt, and their capacity to trip up the Chinese economy.
There have been indications since July of mounting government pressure. Wanda has announced the sale of 77 of its hotels and 13 tourism projects to Chinese real estate developers Sunac and R & F properties for a whopping $9.3bn.
Beijing has also ordered Anbang to sell all of its overseas assets, according to Bloomberg. The entire private sector has suffered the consequences.
The only companies still permitted to make overseas investments are firms 'supporting the real economy or working with new technologies. As a result, Chinese non-financial sector overseas investment plummeted 46 percent in the first half of 2017.
MENAFN1908201700630000ID1095750845
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.