It’s necessary to guide outbound investment with policies, says China’s central bank governor
Zhou Xiaochuan, China’s central bank governor said at a press conference on Friday that some “overheated” and “not well-intentioned” outbound investment should be regulated, and it’s necessary to work out guiding polices for overseas investment in sectors like sports and entertainment.

Growth of China’s outbound direct investment has been speeding up since last year, with foreign direct investment into China slowing down instead. When asked about increasing concerns on more strict reviews on ODI, Zhou Xiaochuan, governor of the People’s Bank of China confirmed that the government would “manage” those outbound investments that are overheated or not well-intentioned.

China’s ODI is still a new phenomenon, and now, “with more and more information and knowledge about the overseas investment environment and related laws, ODI has become a vogue thing, with certain amount of it being overheated and with no purpose,” said Zhou.

He also emphasized some outbound investments failed to follow China’s industrial policy, which is known to have long encouraged strategic investments that have the potential to contribute positively to the local economy. Investments in sectors like sports, entertainment and clubs apparently would not accomplish that goal and are not regarded as strategic investments.

Regarding concerns that growth of foreign direct investment flowing into China has slowed down, Zhou said it would not be easy to maintain the continuously growing momentum when the country’s capabilities in drawing FDI has amounted to over USD 100 billion annually. “China will extend its policies to attract FDI and continue to improve on its investment environment…Meanwhile, we would start with the Shanghai Free-Trade Zone and expand (its practices) to several other free trade zones,” said Zhou.

Yi Gang, deputy governor of the country’s central bank, said during the conference if China uses foreign exchange reserves to secure the yuan’s exchange rate, then advantages would outweigh disadvantages. It is reported by previously that China’s State Council has formulated temporary policies to regulate outbound investment in more strict ways in order to prop up sharply decreasing foreign exchange reserves amid a slowing economy and the yuan’s depreciation expectations.

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