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LEGAL: New Trend On Outbound Investments
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New Trend On Outbound Investments

By Manuel Torres (Managing Partner of Garrigues China), Lucy Luo (Principal Associate), Echo Shen (Corporate Associate)

BT 201711 LEGAL 03      2017 年 8 月 4 日,经国务院同意,发改委、商务部、人民银行和外交部联合颁布《关于进一步引导和规范境外投资方向的指导意见》(国办发〔2017〕74 号)(下称“《指导意见》”),在先前的对外投资“负面清单”基础上,进一步将对外投资划分为了“鼓励类”、“限制类”和“禁止类”。其中,对鼓励类项目,投资企业在税收、外汇、保险、海关、信息等方面享受更好的条件;对限制类项目,要求监管部门引导企业审慎参与,并结合实际情况给予必要的指导和提示;对“禁止类”项目,采取切实有效的措施严格管控。《指导意见》引起各界关注。

      首先,文件指出限制境内企业开展与国家和平发展外交方针、互利共赢开放战略以及宏观调控政策不符的境外投资,其中包括:1. 赴与我国未建交、发生战乱或者我国缔结的双多边条约或协议规定需要限制的敏感国家和地区开展境外投资。2. 房地产、酒店、影城、娱乐业、体育俱乐部等境外投资。3. 在境外设立无具体实业项目的股权投资基金或投资平台。4. 使用不符合投资目的国技术标准要求的落后生产设备开展境外投资。5. 不符合投资目的国环保、能耗、安全标准的境外投资。其中,前三类须经境外投资主管部门核准。




BT 201711 LEGAL 01For the purpose of further guiding, regulating and promoting the development of outbound investments (“ODI”), on August 4th, 2017, the General Office of State Council issued a circular on forwarding the Guiding Circular of the National Development and Reform Commission, the Ministry of Commerce, the People’s Bank of China and the Ministry of Foreign Affairs for Further Guiding and Regulating the Direction of Outbound Investments ([Guo Ban Fa [2017] No.74]) (“Circular 74”).

Current outbound investment regulation regime is mainly constituted by the Administrative Measures for Outbound Investment issued by the Ministry of Commerce (“MOFCOM”) on September 6th, 2014, ([Order of the Ministry of Commerce [2014] No.3]) (“MOFCOM Order No. 3”), the Administrative Measures for Approval and Record-filing on Overseas Investment Projects effective from May 8th, 2014 (NDRC Order No. 9) and then further revised by the National Development and Reform Commission (“NDRC”) on December 27th, 2014 (NDRC Order No. 20 , collectively, “NDRC ODI Orders”) and the Administrative Provisions on Foreign Exchange of the Outbound Direct Investments of Domestic Institutions issued by the State Administration of Foreign Exchange (“SAFE”) on July 13th, 2009 (Hui Fa [2009] No. 30, “SAFE Circular 30”) and the Circular on Further Simplifying and Improving the Direct Investment-related Foreign Exchange Administration Policies issued by SAFE on February 13th, 2015 (Hui Fa [2015] No.13, “SAFE Circular 13”).

Circular 74, on the basis of above mentioned ODI rules, further classifies the outbound investments into three categories, i.e. encouraged, restrict and prohibited, and heralds supporting systems and policies to be constructed or issued to manage and distinguish investment activities as set out in three categories.

BT 201711 LEGAL 04We hereby mainly focus on the newly classified outbound investments categories introduced by Circular 74 as follows -

- Prohibited Category

Prohibited Category was first promulgated by MOFCOM Order No. 3, while NDRC ODI Orders do not expressly set any prohibition. Circular 74 unifies the Prohibited Category with NDRC and MOFCOM, the two major ODI approval administrative divisions by clearly indicating that it is prohibited for domestic enterprises to engage in outbound investment projects that harm or are likely to harm national interests or national security, including:

i. Outbound investments that involve export of core technologies and products in the military industry of China without prior approval of the state;

ii. Outbound investments that utilize technologies, processes or products prohibited from export by China;

iii. Outbound investments in gambling, pornography, etc. sectors;

iv. Outbound investments prohibited in international treaties to which China is a party or has acceded; and

v. Other outbound investments that endanger or may endanger the national interests and security of China.

Among the five prohibited sections, it is worthwhile to note that from legal perspective, currently there is no explict definition of core technologies and products in military industry under section i, therefore, any outbound investment involving technology license and technology transfer in military industry shall pay close attention to the definiton to be further clarified and/or consult both NDRC and MOFCOM as the case may be.

Regarding technologies, processes and products prohibited from export by China, the primary resource is Catalogue of Technologies Prohibited or Restricted to Be Exported in China ([Order of the Ministry of Commerce and the Ministry of Science and Technology [2008] No. 12]) issued by MOFCOM and Ministry of Science and Technology and batches of Catalogue of Prohibited Exports issued by MOFCOM and General Administration of Customs in recent years (hereinafter referred to as “Catalogues”). Furthermore, Measures for Administration of Technologies Prohibited or Restricted to Be Exported intentionally exclude the export of nuclear technology and technologies in relation to dual-purpose nuclear products, dual-purpose chemical products, dual-purpose biological products, missiles, national defense and military products. Extra research shall be undertaken if the outbound investment project may trigger any export of above mentioned technologies and/or processes.

- Restricted Category

Circular 74 provides that restrictions will be placed on outbound investments which go against China's diplomatic policy of pursuing peaceful development road, opening-up strategy of mutual benefits and win-win results, or macro-control policies, including:

BT 201711 LEGAL 07i. Outbound investments carried out in sensitive countries and regions that have not established diplomatic relationship with China, those with wars or those restricted by bilateral or multi-lateral treaties or agreements concluded by China;

ii. Outbound investments in real estate, hotels, cinemas, entertainment and sports clubs, etc.

iii. Setting up equity investment funds or investment platforms abroad without specific industrial projects;

iv. Outbound investments carried out by using backward production equipment that fails to meet the technical requirements of investment destination countries; and

v. Outbound investments that fails to meet environmental protection, energy consumption or safety standards of destination countries.

Section i, ii and iii under the restricted category shall obtain prior approvals from relevant authorities. It has been the first time the Chinese government expressively restricts outbound investment in real estate, hotels, cinemas, entertainment, sports clubs and equity investment funds or platforms without specific industrial projects and the recent outbound investment record shows in August 2017, no said projects obtained ODI approvals from MOFCOM.

Although Circular 74 does not include “sensitive industry” regulated by NDRC Order No.9 and the “sensitive industry” regulated by MOFCOM Order No. 3 in the Restrict Category, based on our communication with competent authorities, said restriction shall still apply and the approvals issued by NDRC and MOFCOM are still compulsory.

However, whether approval procedure or record-filing administraton shall apply to the fourth and fifth sections of the Restricted Category is still unclear, which needs to be clarified by competent authorities.

- Encouraged Category

Circular 74 shows that the Chinese government intends to support competent and eligible domestic enterprises to actively and prudently carry out investment activities abroad. In order to press ahead the “One Belt, One Road” strategy, deepen international production capacity cooperation, foster output of domestic advanced production capacities, good-quality equipment and applicable technologies, improve China's capacity in technology research and development and manufacturing, make up the country's shortage in energy resources, and promote the quality improvement and upgrading of relevant sectors in the country. The Encouraged Category includes following items:

BT 201711 LEGAL 06i. Outbound investments in infrastructure that is conducive to construction of "One Belt, One Road" initiative and interconnection with neighboring infrastructure;

ii. Outbound investments that can drive the output of advantageous production capacity, high-quality equipment and technical standards;

iii. Investments cooperated with overseas high-tech and advanced manufacturing enterprises and encouraging establishment of research and development centers abroad;

iv. Offshore oil and gas, mineral and other energy resources exploration and development on the basis of prudent assessment on economic benefits;

v. Investments that expand agricultural cooperation with foreign countries and carry out mutually beneficial investment cooperation in fields such as agriculture, forestry, animal husbandry, side-line production and fishery; and

vi. Outbound investments in service fields such as business, culture and logistics, and supporting qualified financial institutions in establishing branches and service networks abroad to develop business in compliance with the laws.

Outbound investments in the Encouraged Category would enjoy several preferential policies regarding taxation, foreign exchange, insurance, custom, information etc., which will be legislated and released by relevant authorities.


It is evident that Circular 74 has several adjustments and supplements to the current ODI regulation regime. It plays an important role in further instructing the direction and management of outbound investments. Though the classification and some concepts set forth in Circular 74 are still relatively general, it is expected that relevant authorities will promulgate more specific rules and definitions in this regard. Apart from a series of preferential policies to be issued in the near future, Circular 74 also refers that several new systems will be implemented to regulate outbound investments, such as “the blacklist system for overseas investment” and “the capital fund rules for outbound investment made by state-owned enterprises”. We will keep a close watch on the practice and implementation measure to be promulgated by relevant authority in this field.


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