China has released a code of conduct for private companies
investing abroad as it seeks to head off risky acquisitions, with state
media reporting on Tuesday that a blacklist of violators was in the
works.
The move by the country's top economic-planning
agency appears to be the latest in a government campaign to prevent
acquisitive Chinese firms from over-extending themselves with
ill-advised deals abroad that could threaten financial stability at
home.
The guidelines, released on Monday by the National
Development and Reform Commission (NDRC), contain few hard and fast
rules, but rather a collection of big-picture advice on operating
overseas.
This includes staying within a company's
financial constraints and core competencies, avoiding high-leverage
financing, respecting local laws and customs, and adhering to socially
and environmentally responsible operations.
The state-run China Daily reported Tuesday that a similar code for state-owned entrprises is also in the works, as well as a blacklist of violators.
It
cited an unnamed NDRC official, who said the guidelines and blacklist
"will become major policy tools in curbing investment risks", according
to the newspaper.
The code will complement guidelines
issued in August, which laid out rules restricting investment in
industries such as property, sports and entertainment, the official was
quoted saying.
China has moved aggressively over the past
year to halt a flood of overseas investment that has raised concerns of
capital flight, and contain in ballooning debt at home that has drawn
warnings of a potential global financial crisis.
In
particular, authorities are said to be targetting large private Chinese
companies such as Wanda, Fosun, HNA and Anbang, which have drawn
increased scrutiny over concerns they were racking up dangerous debt
levels with tens of billions of dollars in sometimes flashy foreign
investments.
In conjunction with the private-firm
guidelines, the NDRC also released a statement by an unnamed official
with the planning agency saying some Chinese companies had encountered
"irregularities in overseas investments".
"Some companies
did not follow domestic and foreign audit procedures and conducted
illegal investments overseas," the statement said.
"Some
companies made blind decisions and caused huge economic losses. Some
companies were involved in malignant competition and undertook overseas
projects regardless of the cost."
