Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

China to crack down on fake overseas M&A deals to curb money flight

Published 09/22/2016, 06:43 AM
Updated 09/22/2016, 06:50 AM
© Reuters.  China to crack down on fake overseas M&A deals to curb money flight

© Reuters. China to crack down on fake overseas M&A deals to curb money flight

BEIJING (Reuters) - China's forex regulator said on Thursday it will crack down on fake overseas mergers and acquisitions used by some local firms and individuals to move assets out of the country, even as capital outflow pressure is easing.

The government will support "genuine" overseas mergers and acquisitions by Chinese firms, although rapid rises in outbound investment have had an impact on cross-border capital flows, Guo Song, an official with the State Administration of Foreign Exchange (SAFE), told a Beijing news conference.

"In the past year we found some Chinese firms and individuals moving assets overseas via outbound investment, this is certainly a key area of concern for us," Guo said, without disclosing details.

The authorities will "definitely put high pressure" on tackling fake overseas mergers and acquisitions, he said.

China will crack down on illegal activities to keep its foreign exchange markets stable, SAFE official Xu Weigang told the same conference.

The Chinese government has been encouraging local firms to invest overseas under Beijing's "One Belt, One Road" program, but rapid rises in outbound direct investment (ODI) have fanned concerns over increased pressure on China's foreign exchange reserves and external payments.

China's overall ODI jumped 18.3 percent in 2015 to a record $145.67 billion, surpassing the annual foreign direct investment that reached $135.6 billion, earlier government data showed.

Despite the phenomenon, pressure on cross-border capital outflows is easing, which will help lower depreciation pressure on the yuan <CNY=CFXS>, SAFE spokeswoman Wang Chunying said.

Du Peng, another SAFE official, however, said no "large-sized" capital outflow via fake trade deals has been detected by the supervisory body so far, and discrepancy between custom data and forex data is no proof that fake trade deals are happening.

Recent data showed net foreign exchange sales by China's commercial banks in August fell to the lowest in about a year, but net foreign exchange sales by the People's Bank of China in August hit the highest in six months, as the central bank sought to support the yuan.

Guo also said that the current quota on the Qualified Domestic Institutional Investor (QDII) scheme had been used up and the regulator is applying for an additional quota.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.