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
One Madison Avenue and Marc Holliday (Photos via SL Green)

SL Green snags $1.25B construction loan for One Madison Avenue

SL Green snags $1.25B construction loan for One Madison Avenue
11 Penn Plaza and 120 Wall Street (VNO, Wikipedia Commons)

Manhattan’s top real estate loans post second best month since March

Manhattan’s top real estate loans post second best month since March
Square Mile Capital CEO Craig Solomon and The Real Deal's Hiten Samtani

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack

WATCH: “It’s going to take longer, and it’s going to cost more”: Craig Solomon on the real estate capital stack
OneTitle's Seth Brown (iStock)

OneTitle set out to change the title industry. Now it’s out of business

OneTitle set out to change the title industry. Now it’s out of business
The Scribner Building at at 597 Fifth Avenue and Joe Sitt of Thor Equities (Wikipedia Commons)

Thor delinquent on $105M loan at 597 Fifth

Thor delinquent on $105M loan at 597 Fifth
Pension fund investors are seeking to take cash out of real estate funds as property values fall, like at Water Tower Place in Chicago (Photo via iStock; Wikipedia Commons)

Core real estate funds delay investors from cashing out

Core real estate funds delay investors from cashing out
arrow_forward_ios

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

Loading...