China reduces international investments

China set new regulations to control overseas investments involving the gaming industry.

China.- The government of China has published new conditions to set overseas investments involving gaming, hotel, entertainment and real estate industries. The regulation seeks to reduce the “irrational” acquisition of assets, as reported today the local newspaper Macau Daily Times.

“China wants its money to focus on specific sectors that can help boost long-term growth potential,” described to the newspaper Zhou Hao, a senior emerging-markets strategist at Commerzbank AG in Singapore. “The new policy also tries to close the loophole of suspicious capital outflows and possible money laundering.”

According to the local assessment, the gaming industry could be the most profitable route “used by high net-worth private citizens and corrupt government officials seeking to circumvent China’s strict currency controls.” Last year the government reported a record-breaking US$816 billion in capital outflows leaving China.

Now the government has labelled gaming industry’s investments under the “banned” category. “This is the state saying we want better say over where China’s resources are going abroad,” Andrew Polk, co-founder of research firm Trivium China, told Bloomberg. “We didn’t have a clear accounting of this before, but we could piece it all together from what was said by various elements of the government. Now it’s de jure policy while previously it was de facto policy.”