spot_img
28.6 C
Philippines
Friday, March 29, 2024

China cracks down on spending sprees

- Advertisement -

BEIJING—China is to restrict foreign investments in sports clubs, real estate and entertainment and is banning investment in pornography and “unauthorized” military technology.

The new rules were announced Friday by the government, which had previously encouraged overseas spending sprees, but then warned late last year of “irrational” acquisitions amid fears that powerful conglomerates were racking up dangerous debt levels.

The announcement came days after British football club Southampton said it had entered into a partnership with Chinese businessman Gao Jisheng, with press reports saying he and his family had paid ï¿¡200 million ($259.5 million) for an 80 percent stake.

“Foreign investments that do not conform to China’s efforts towards peaceful development, mutually beneficial cooperation and to macroeconomic regulation are subject to restriction,” said the government, adding it wanted to “prevent risks.”

Chinese firms will no longer be able to invest in conflict zones and places that do not have diplomatic ties with China.

- Advertisement -

The rules also ban investments that could harm the country’s interests and security.

High-profile Chinese deals in recent years have grabbed the limelight including Fosun’s takeover of Club Med, HNA’s stakes in Deutsche Bank and Hilton hotels, Anbang’s purchase of New York’s historic Waldorf Astoria, and Wanda’s control of Hollywood studio Legendary Entertainment and 20 percent of the Atletico Madrid football club.

But authorities now appear to be concerned about the influence of these conglomerates, their mazes of subsidiaries and debt, and their capacity to trip up the Chinese economy.

There have been indications since July of mounting government pressure.

Wanda has announced the sale of 77 of its hotels and 13 tourism projects to Chinese real estate developers Sunac and R&F properties for a whopping $9.3 billion.

Beijing has also ordered Anbang to sell all of its overseas assets, according to Bloomberg.

The entire private sector has suffered the consequences.

The only companies still permitted to make overseas investments are firms “supporting the real economy” or working with new technologies.

As a result, Chinese non-financial sector overseas investment plummeted 46 percent in the first half of 2017. 

Meanwhile, China’s first “cyber court” was launched on Friday to settle online disputes, as the legal system attempts to keep up with the explosion of mobile payment and e-commerce.

Residents of the eastern city of Hangzhou — home to e-commerce giant Alibaba — can now register their internet-related civil complaints online and wait to log onto to their trial via videochat.

The cyber court will “offer regular people an efficient, low-cost solution to these new kinds of disputes that take place on the internet,” Du Qian, the cyber-court chief justice, told the official Supreme People’s Court news agency.

“Not only will this make lawsuits as convenient as online shopping, but it will also give online shopping the same degree of judicial protection as consumption at brick-and-mortar stores.”

The court will handle cases such as online trade disputes, copyright lawsuits and product liability claims for online purchases.

China is home to the world’s largest number of internet users — 731 million at the end of last year — and e-commerce is a vital part of the government’s efforts to turn China into a consumer demand-driven economy.

Consumers spent $17.8 billion during Alibaba’s biggest online shopping promotion on November 11 last year, more than twice the five-day desktop sales from Thanksgiving through Cyber Monday in the US last year.

- Advertisement -

LATEST NEWS

Popular Articles