New Guidelines on China Outbound Investment

On August 18 2017, China’s State Council published Guiding Opinions on Further Guiding and Regulating Outbound Investment Orientation (the “Guidelines”) which are collectively issued by the National Development and Reform Commission (“NDRC”), Ministry of Commerce (“MOFCOM”), People’s Bank of China (“PBOC”) and Ministry of Foreign Affairs.

Comparing to the previous regulations such as Outbound Investment Management Measures (2014) and Management Measures on Approval and Record of Outbound Investment Projects (2014), the Guidelines formally establish the principle of guiding and regulating the outbound investment – “the record-filing management system together with the mode of “encouraging development and negative list”.

The main contents of the Guidelines are as follows:

1.     The Guidelines classify the overseas investment into three categories:

Encouraged investment

Competent and qualified Chinese enterprises are encouraged to actively engage in:

i.              Promoting outbound investment in the construction of “One Belt, One Road” initiative and interconnection with surrounding infrastructure;
ii.          Carrying out outbound investment that can drive China’s production capacity, high-quality equipment and technical standards;
iii.        Strengthening investment cooperation with overseas high-tech and advanced manufacturing enterprises and encouraging the establishment of R&D centers abroad;
iv.        Participating in offshore oil and gas, mineral and other energy resources exploration and development;
v.          Striving to expand agricultural cooperation with foreign countries and carrying out mutually beneficial and win-win investment in the fields such as agriculture, forestry, animal husbandry, side-line production and fishery;
vi.        Promoting outbound investment in services such as business, culture and logistics, supporting qualified financial institutions in establishing branches and service networks abroad.

Restricted investment

Chinese enterprises are restricted in carrying out outbound investment that is inconsistency with China’s foreign policies of peaceful development, mutually beneficial win-win and opening up strategy as well as macro-control policies, including:

i.               Outbound investment carried out in sensitive countries and regions that have not established diplomatic relationship with China, those with wars or those restricted by bilateral or multilateral treaties or agreements concluded by China;
ii.          Outbound investment in real estate, hotels, cinemas, entertainment and sports clubs, etc.;
iii.        Setting up equity investment funds or investment platforms abroad without specific industrial projects;
iv.        Outbound investment carried out by using backward production equipment that fails to meet the technical requirements of the investment destination countries;
v.          Outbound investment that fails to meet the environmental protection, energy consumption or safety standards of the investment destination countries.

Please notice that the first three categories of restricted investment mentioned above are subject to the approval system of outbound investment by the Chinese authorities.

Prohibited investment

Chinese enterprises are prohibited from participating in outbound investment that endangers or may endanger the national interests or state security of China, including:

i.              Outbound investment involving the export of core technologies and products in the military industry without the approval of China;
ii.          Outbound investment by using technologies, techniques or products prohibited from exporting by China;
iii.        Outbound investment in gambling or sex industry, etc.;
iv.        Outbound investment prohibited by international treaties concluded or participated by China;
v.          Other outbound investment that endangers or may endanger national interests or security of China.

2.     The Guidelines clarify certain supporting measures to facilitate and secure the outbound investment, including:

a. Improve services for enterprises in respect of taxation, foreign exchange, insurance, customs and information for encouraged categories of outbound investment;

Guide enterprises to participate in a prudent manner and give necessary tips for restricted categories of outbound investment;

Take effective measures on the strict management and control for prohibited categories of outbound investment.

b. Strengthen the review of authenticity and compliance of outbound investment;

Establish an outbound investment blacklist system;

Establish an inter-department information sharing mechanism;

Establish and improve decision-making system, financial management system and accountability system for the violation of regulations for outbound investment;

Establish an outbound investment capital system for state-owned enterprises;

Improve the outbound investment auditing system for state-owned enterprises.

c. Establish a code of conduct for outbound investment to guide enterprises to establish and improve overseas compliance risk review, control and decision-making system;

Strengthen institutional cooperation with relevant countries in respect of investment protection, finance and personnel exchanges;

Support the development of service providers such as assets assessment, legal services, accounting services, tax services, investment consultants, design consulting, risk assessment, certification and arbitration, in order to serve the enterprises carrying out outbound investment.

d. Regularly release Country-by-Country Reports on the Facilitation of Investment Operation;

Strengthen guidance and supervision for the enterprises to carry out investment in countries and regions with high risks, timely give warning and notification of the political, economic and social major risks in relevant countries;

Urge enterprises to carry out safety risk assessment on outbound projects, to properly forecast and respond to project safety risks, to establish and improve the security system, to strengthen security training and to enhance safety.


The Guidelines create the clear framework of supervision and management over the outbound investment through the principle of record-filing based and negative list management system, which will improve the facilitation level of outbound investment and further promote the reform of streamlining administration, combination of decentralization and control, as well as government service optimizing.

The Guidelines add two categories below to restricted outbound investment, which will apply to the approval management system for outbound investment instead of record-filing system, so that we need to pay attention to this change in order to understand the new trend of restrictions on certain fields of outbound investment:

i.               Outbound investment in real estate, hotels, cinemas, entertainment and sports clubs, etc.;
ii.          Setting up equity investment funds or investment platforms abroad without specific industrial projects.

The Guidelines establish categories and support measures which will help to improve the management of outbound investment. However, such regulations seem to be broad and may bring the difficulties during the application of the Guidelines. Therefore, the detailed implementational measures need to be published to specify those uncertainties in future.