China warns that it will not tolerate “irrational” overseas investment

Regulations are now formalized

New York /
Aug.August 18, 2017 09:45 AM

Chinese regulators — who’ve been cracking down on capital outflows for months — have now formalized regulations for overseas investing to protect against “irrational” acquisitions across several industries.

Citing “various risks and challenges in overseas investments,” the State Council laid out three categories — banned, restricted and encouraged — for investment. Investing in gambling, the sex industry and core military technology is banned. Real estate investment is considered restricted and investments in Chinese research and development are encouraged.

China’s top economic planning body, the National Development and Reform Commission, criticized “irrational” overseas investments in sectors including real estate, entertainment and security. “Some companies focused on property rather than the real economy, which, instead of boosting the domestic economy, triggered capital outflows and shook financial security,” it said, according to Bloomberg.

In recent months, Chinese regulators have taken a close look at investments by major backers of New York City real estate, including Fosun International, HNA Group and Anbang Insurance Group, which paid nearly $2 billion for the Waldorf-Astoria Hotel and was reportedly in talks to invest in Kushner Companies’ 666 Fifth Avenue before scrutiny killed the deal.

Last year, Chinese investment abroad topped $816 billion, according to Bloomberg, which said a primary route was casinos in Macau. But China’s investment abroad dropped 44.3 percent during the first seven months of the year, as regulators curbed foreign acquisitions.

“Policy makers are also concerned about the potential investment loss and financial risk related to the takeover of ‘trophy assets,'” said Robin Xing, chief China economist at Morgan Stanley in Hong Kong. [Bloomberg]E.B. Solomont


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
With major financial choices to make, Newmark receives $850M infusion
With major financial choices to make, Newmark receives $850M infusion
With major financial choices to make, Newmark receives $850M infusion
Hudson Yards (iStock)
EB-5 program set to expire at the end of June
EB-5 program set to expire at the end of June
NYCEEC co-CEOs Curtis Probst and Fred Lee (iStock, NYEEC)
The wait is over: C-PACE finally goes live in NYC
The wait is over: C-PACE finally goes live in NYC
Nightingale’s Eli Schwartz and 111 Wall Street (Google Maps, Nightgale)
Nightingale, Wafra secure $500M loan package to revamp 111 Wall
Nightingale, Wafra secure $500M loan package to revamp 111 Wall
1133 Sixth Avenue, 114 West 47th Street, 537 Greenwich Street and 55 Broadway (Tdorante10/Wikimedia, Durst Organization, Easter Consolidated Google Maps)
These were the largest Manhattan real estate loans in May
These were the largest Manhattan real estate loans in May
Acting Katara CEO Andrew Humphries and 355 West 16th Street (Google Maps, AHIC)
Katara Hospitality takes over Dream Downtown’s $125M ground lease
Katara Hospitality takes over Dream Downtown’s $125M ground lease
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...