Hong Kong Sees Silver Lining in Tighter Rules for Mainland China’s Outbound Investments
China’s State Council has recently signed off a guideline to promote healthy growth of outbound investment. Simon Lee told South China Morning Post that [mainland] businessmen could be keen to invest in Hong Kong’s infrastructure, given that the Hong Kong government had billed the city as a “super-connector” in the Belt and Road initiative, helping mainland firms to go global.
On 18 August 2017, China’s State Council has signed off a guideline to promote healthy growth of outbound investment. Beijing has set out three categories – banned, restricted and encouraged – as it seeks to “push ahead reasonable and orderly outbound investments”, the directive stated.
Among banned investments are those in the gambling and sex industry. Restricted ones requiring regulatory approval include property, hotels, cinemas and companies setting up overseas equity funds or investment vehicles not tied to specific projects. But the authorities are encouraging companies to invest in the hi-tech sector, research, logistics and infrastructure projects that facilitate the Belt and Road Initiative – the country’s go-global trade strategy.
Beijing’s new rules on “irrational” outbound investment from mainland China could spell fresh benefits for Hong Kong, possibly driving down land prices and injecting funds into the city’s technology sector and infrastructure, analysts said.
In an interview with South China Morning Post, Simon Lee, Senior Lecturer of School of Accountancy and Co-director of International Business and Chinese Enterprise program at The Chinese University of Hong Kong Business School, said the influence on Hong Kong of Beijing’s capital outflow restrictions would depend on whether any further rules were unveiled.
“A huge sum of money has already left the mainland. Will there be restrictions on that? The directive did not touch on this part and that’s a grey area,” he said.
Businessmen could be keen to invest in the city’s infrastructure, Lee said, given that the Hong Kong government had billed the city as a “super-connector” in the Belt and Road initiative, helping mainland firms to go global.
He said mainland investors would not be interested in investing in Hong Kong hotels – a restricted area under the directive – because most were now run by wealthy foreign companies, leaving little room for newcomers… Read More (PDF)
Please click here to find out more about the directive on outbound investment issued by China’s State Council.
Please also click the image below to read the story published in the print edition of South China Morning Post.
Source: South China Morning Post
Date published: 23 August, 2017
Photo: Edmond Siu