China's State Council Publishes New Guidance on Regulation of Outbound Investment

China's State Council Publishes New Guidance on Regulation of Outbound Investment

September 8, 2017, Covington Alert

On August 18, 2017, the General Office of China’s State Council released to the public new guidance regarding the regulation of outbound investment. The guidance is set forth in a notice, dated August 4, 2017, forwarding “guiding opinions” (the “Opinions”) from the National Development and Reform Commission (“NDRC”), Ministry of Commerce (“MOFCOM”), People's Bank of China (“PBOC”), and the Ministry of Foreign Affairs (“MFA”) to relevant government authorities throughout China.  The Opinions introduce a new taxonomy of “encouraged,” “restricted,” and “prohibited” categories of outbound investment transactions, but they do not clearly define such categories or explain the consequences of such classifications. Thus, although the Opinions provide some information as to the Chinese government’s current approach to regulating outbound investment, market participants will need to await further guidance or new regulations before the full implications of the Opinions can be understood.