In the years 2004 and 2005, the China Development and Reform Committee, together with Import and Export Bank of China, issued two Notifications on the state’s support of major projects in outbound investment. In the Notifications, the two institutions addressed Chinese governments at all levels and state owned enterprises to support and facilitate financing for outbound investment. The Notifications provide that China Development and Reform Committee and Import and Export Bank of China will build a credit aid mechanism for outbound investment. Based on the nation’s policy, the Import and Export Bank of China will arrange finance that is specifically made for the purpose of supporting projects encouraged by the state. These special-purpose loans receive a favorable interest rate. Primarily, these special-purpose loans are for the following projects:
1. Investment projects on resources that can compensate China’s lack of resources;
2. Productive projects or infrastructure projects that can facilitate the export of China’s technology, products, facility or the export of labor service;
3. Overseas research and development center program that can utilize international advanced technology, management experience, and professionals;
4. Merger and acquisition projects that can improve enterprises’ international competence and that can accelerate the exploration of international market.
Any corporation that is chartered in China is eligible to apply for these loans.
The Notifications also provide that the Development and Reform Committee guides and facilitates those outbound investments in order to achieve good economic and social effects. Likewise, the Import and Export Bank of China shall accelerate the review process for these projects. In addition, the Bank will also provide other services, such as cooperating with international financial organizations to put financial plan into practice. The Bank will further extend the length of maturity for loans made to strategic projects.
The two Notifications can be found at http://www.ndrc.gov.cn/wzly/jwtz/jwtzzn/t20050928_44059.htm and http://www.ndrc.gov.cn/zcfb/zcfbtz/zcfbtz2004/t20050613_7160.htm.
In year 2009, the Development and Reform Committee further issued another Notification on outbound investment. In the Notification, the Committee stated that, these years, Chinese enterprises apparently increased the volume of their outbound investment, under the guidance of the state’s “Go Global” policy. This Notification applies to investment projects that are approved by the Committee or the State Council, including outbound acquisition and overseas competitive bidding. The Notification requires Chinese enterprises deliver to the Committee, as well as other concerning governmental departments, informational reports on their investment projects. The informational reports shall provide all required information listed on the Committees’ website, www.ndrc.gov.cn. The Committee will issue a confirmation letter with seven days upon receiving an informational report. If the Committee discovers any substantial adverse factor related to the proposed investment project, the Committee will include a risk tip in the confirmation letter. With projects that have adverse factors, the Committee will exercise strict scrutiny and the enterprise shall act with caution. The Notification further provides that the Committee will circulate a notice of criticism for enterprises that violate the Notification. The Committee may further sanction on concerning departments and leaders for violating the Notification.
The 2009 Notification can be found at http://www.sdpc.gov.cn/zcfb/zcfbtz/2009tz/t20090619_286696.htm.
In 2005, the State Administration of Foreign Exchange issued a Notification on banks’ adjustment made to investing enterprises’ external guarantee with a financing nature. In the Notification, the State Administration of Foreign Exchange stated that, in order to support enterprises participating in international cooperation and to solve of problem of financing, under the Administrative Measures on Domestic Institutions’ External Guarantee, the Administration decided to further simplify the procedure that authorized bank for dealing in foreign exchange provides external guarantee to overseas subsidiaries of domestic enterprises.
The Notification issued by the State Administration of Foreign Exchange can be found at http://www.law-lib.com/law/law_view.asp?id=96619.
In addition, in 2007, China Insurance Regulation Commission, together with People’s Bank of China and the Administration of Foreign Exchange, provided an administrative measure to regulate Outbound Investment made by Insurance Fund. http://www.law-lib.com/law/law_view.asp?id=206909.