China to introduce new law on outbound investment

China's Ministry of Commerce and top economic planner, the National Development and Reform Commission (NDRC), are expected to introduce a new, higher-level law on outbound investment this year, Economic Information Daily reported on Tuesday.

The new law will not only clear up and integrate current related regulations, but also explicitly stipulate the definition of outbound investment, approval procedures, entry-exit personnel, capital financing, profit distribution, profit reinvestment, tax policy and so on.

An unnamed insider told Economic Information Daily that the new law will encourage investment which yields sound social and economic benefits, strengthens supervision on aimless or irrational investments, and prohibits and punishes investment behaviour violating laws of China or the destination country of the investment.

China's Ministry of Commerce and top economic planner, the National Development and Reform Commission (NDRC), are expected to introduce a new, higher-level law on overseas investment this year. [Photo: chinaforex.com.cn]

China's outbound investment has seen rapid growth in recent years, and has surpassed foreign investment in China. As of the end of 2015, 20,000 Chinese investors had established 30,000 overseas firms and the total amount of foreign assets reached 4.4 trillion US dollars.

However, right now, China has only a patchwork of lower-level regulations from various ministries to govern outbound investment. Liang Guoyong, an economic affairs officer at the United Nations Conference on Trade and Development (UNCTAD), said the new, higher-level law will help resolve new problems on outbound investment, and effectively protect overseas commercial interests.