China Matters: China Loosens Control Over Outbound Investments
By Paul Hastings Professional
Since 2005, Chinas outbound investments have attracted widespread attention. Recent headline transactions include Aluminum Corporation of Chinas on-going US$14 billion investment in Rio Tinto, and China Investment Corporations proposed US$800 million investment in Morgan Stanley Real Estate Fund. With a foreign currency reserve of close to US$2 trillion, many market participants see Chinese companies and sovereign wealth funds as some of the last viable investors in the worst investment climate in recent decades.
Recently, the Chinese central government made outbound investments easier to complete by revamping the approval guidelines for outbound investments. On March 16, 2009, Chinas Ministry of Commerce (MOFCOM) promulgated the Measures on Administration of Outbound Investment (2009) (2009 Outbound Investment Rules), which significantly change the types of outbound investments that require (i) central government level MOFCOM approval versus (ii) provincial government level MOFCOM office (commonly referred to as COFTEC) approval.