IC Markets

China To Curb ‘Fake’ Overseas Merger & Acquisition Deals

Flag of ChinaChina is making attempts to suppress the fake international acquisition and merger deals that local companies are using for moving assets outside the nation. Previously, China has put into action few capital controls to clamp down the capital flow outside the country.

Forex regulatory officials of State Administration of Foreign Exchange (SAFE) have stressed that the China government will take some stringent measures to take control of the fake mergers on an urgent basis. Guo Song, who is an official from SAFE, has made the following statement in this regard:

In the past year we found some Chinese firms and individuals moving assets overseas via outbound investment, this is certainly a key area of concern for us.

Guo while addressing a press conference has said that the Chinese government will only support acquisition deals that are authentic. There are fears that the increasing number of outbound investments is going to hurt the capital flows of the country. Xu Weigang, another official from SAFE, has also stated in the same press event that the government of China will make every single effort to curtail the illegal actions and make the Forex market sturdy and stable.

On the contrary, an official from SAFE Du Peng is the view that fake trade deals have not resulted in any major capital outflow from China. He further stated that the inconsistency between the custom data and Forex should not be correlated to the fake merger and acquisition deals.

The administration of China is trying to boost the local companies to invest overseas under One Belt, One Road Program. But these steps are proving to be a failure because of the growth and development of the outward-bound investments. It has triggered concerns that the nation will have to battle capital fear in the absence of a booming and stable economy.

The Chinese government has released some data in which the amount of outbound direct investment (ODI) increased to $145.67 billion in 2015. There is an 18.3% growth in these investments as compared to the previous year, and it is a new record. The FDI or Foreign Direct Investment into the nation for the same period was $135.6 billion.

Despite these figures, Wang Chunying, a spokesperson from SAFE, has elucidated that international capital outflows pressure is reducing with the passage of time. These comments from SAFE official came after Brad Setser who is an official from US Treasury speculated that an increase in spending by tourists from China could mean as an endeavour to move the assets out of the nation.

Setser has commented that the gap between the Chinese visitors going abroad and their total spending is on the rise. It indicates that their capital is being moved out of the country to a foreign market by purchasing life insurance policies, opening bank accounts or buying houses.

Steven Rudford

Steven Rudford

Hello, my name is Steven Rudford. Welcome to Top10FX.net. Follow my website for the most trustworthy Forex broker reviews and last minute financial trading news.

IC Markets

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