BEIJING (Dow Jones)--China has streamlined the approval process for local companies planning to invest overseas in a move that further opens the door for cash-rich enterprises to expand their international presence.
While China is the world's largest recipient of foreign direct investment, the amount of investment by Chinese companies abroad remains comparatively small.
The new regulations posted this week on the Ministry of Commerce Web site dramatically reduce the approval procedures for local firms looking to invest overseas.
Adding to the streamlining of the process, the ministry will now accept applications and issue its approval through its Web site.
The ministry will also no longer review the feasibility of each proposal, putting the risk back on the financial supporters of each project for the success or failure of their proposed investment.
Chinese companies have recently begun limited forays into the world market, with state-run oil firms and mining companies in the vanguard.
Total overseas direct investment by Chinese firms rose 5.5% on year to US$2.85 billion in 2003, a drop in the bucket compared with actual foreign direct investment in China of US$53.5 billion.
State-owned firms accounted for 43% of the total overseas investment by Chinese enterprises last year.
Yet that total overseas investment in 2003 would be completely overshadowed by a single proposed deal now under negotiation in Canada.
China's Minmetals is in exclusive talks to purchase Canadian nickel and copper giant Noranda Inc. (NRD) in a deal reportedly worth more than US$5 billion.
Other deals this year include Sinochem Corp., one of China's major oil and petrochemical trading companies, buying a 14% stake in an oilfield in Ecuador owned by ConocoPhillips Corp. (COP) for US$100 million.
Yanzhou Coal Mining Co. (YZC), China's largest listed coal producer, Monday agreed to buy Australia's Southland Coal Mine from the liquidators of Southland Coal Pty Ltd. for A$32 million.
The government hopes some of the investments will not only help to secure stable supplies of strategic commodities but help to balance the surge in foreign direct investment in China which has picked up since the country's entry into the World Trade Organization.
Besides approval from the Ministry of Commerce, Chinese firms also need clearance from the State Administration of Foreign Exchange, the agency in charge of cross-border capital controls, before shifting money offshore.
Ministry Web site: www.mofcom.gov.cn
-By Owen Brown, Dow Jones Newswires; 8610 6588-5848; owen.brown@dowjones.com
-Edited by Sharon Buan
Source: iWon.com
