In an effort to encourage overseas acquisitions by Chinese companies, China plans to remove the need for State Council approval on large, sensitive outbound deals.
New rules to hasten approvals and allow Chinese competitors to compete head-to-head have come out of China’s chief outbound investment regulator, the National Development and Reform Commission (NDRC).
The proposed rule changes say approval from the State Council is no longer necessary for Chinese companies to carry out a deal of $2 billion or more in sectors or countries that China deems sensitive. Nor will proof of financing be required.
Led by Premier Li Keqiang the State Council is China’s cabinet and includes the heads of major departments and agencies. Sensitive deals will still need the approval of the NDRC and the Ministry of Commerce, or MOFCOM, China’s other investment regulator.
The NRDC plans to remove an extra layer of red tape faced by companies based in far-flung provinces by reducing the role the regional bureaus play in approving deals.
The draft was published online in early April, according to Reuters, but stalled following Anbang Insurance Group’s decision to drop a $14 billion bid for Starwood Hotels.
The proposal would also remove the NDRC’s discretionary power to operate an informal policy of giving one Chinese company the exclusive right to bid for an overseas deal, said Reuters. This policy was aimed at preventing competition among Chinese bidders at the expense of the state, but has been criticized by market participants.
The new rules are expected to come into force soon after the consultation closes on May 13.