In the news: China plans to impose outbound curbs, Disney cuts ties with a Chinese factory and the Chicago Stock Exchange acquisition gets scrutinized

Outbound investment curbs?

China is reportedly planning sweeping restrictions on domestic companies' overseas acquisitions, including barring investments of $10 billion or more. The government will suspend several categories of deals while leaving room for some strategic transactions to be executed, but the proposal is to restrict outbound investments of at least $1 billion in industries outside a buyer's core business, and real estate deals worth $1 billion or more by state-owned enterprises (SOEs), according to private documents. The curbs will last until the end of September 2017, and regulators will pay extra attention to deals by firms with a high leverage or poor return on assets. Officials from the People's Bank of China (PBOC) and the National Development and Reform Commission (NDRC) confirmed the tightened screening of outbound projects on Monday, and a Shanghai foreign exchange authority told banks in the city to alert Beijing of any overseas payments exceeding $5 million under the capital account. China has been trying to balance local companies' demands for acquiring foreign assets and the need to limit cross-border currency movements. And despite an NDRC draft proposing to further simplify outbound regulatory processes released this summer, lawyers have said that converting renminbi to foreign exchange has been more challenging this year, and that officials have deliberately been delaying clearances in order to prioritize the control of capital outflow.

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