Is The Chinese Spending Splurge About to end

The days of mainland Chinese tycoons snapping up vineyards in Bordeaux and New York trophy penthouses may be over as Beijing begins to tighten capital outflows.

A report in Hong Kong publication The South China Morning Post (SCMP) states that the Chinese government is embarking on a policy shift designed to stem capital outflows by placing curbs on mainland China’s outbound investment.

In recent years China based business leaders have poured billions into acquisitions of overseas business projects as well as softer purchases such as football clubs and wineries.  

The SCMP piece says Shanghai’s municipal foreign exchange authority has instructed bank managers in the city that all overseas payments, under the capital account bigger than $5 million, would have to be submitted to Beijing for special clearance before proceeding.

Asset Diversification

While this does not mean and end to such overseas deals the reported change in process would greatly slow down approval and also shine an unwelcome spotlight on those looking to move money out of the country.  

Lack of products and investment opportunities onshore has seen outbound investment focused on asset diversification due to growing capital outflow pressure surge in recent years.

Among the latest acquisitions in British soccer by China based investors include the takeovers of Aston Villa, Wolverhampton Wanderers and West Bromwich Albion who have all gone into Chinese ownership with more than GBP 270 million spent.  

 

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