Recent developments in the PRC regulatory approvals process reflect an ongoing commitment to China’s Go Global Policy and represent a growing sophistication in the management of legitimate competing policy objectives. A careful analysis of the entire approval regime shows a government that is seeking to balance competing policies – on the one hand the encouragement of OFDI and resulting management of capital reserves, and on the other hand, putting in place policies to bring increasing fiscal rigor and accountability to the SOE sector.

Despite recent media speculation of a slowdown in China, Chinese outbound foreign direct investment (OFDI) continues to grow.  Indeed, in December 2012 China recorded its highest levels of Chinese OFDI and in a first OFDI exceeded inbound FDI.  According to the Ministry of Commerce, Chinese OFDI for the year 2012 was US$77.2 billion, up from US$60.1 billion in 2011.  Australia as a beneficiary of  Chinese OFDI needs to understand the PRC regulatory framework governing Chinese OFDI.

The proposed amendments to the PRC regulatory approvals process announced by the National Development Reform Commission (NDRC) will further facilitate and encourage higher levels of Chinese OFDI. On 16 August 2012, the NDRC published consultation draft rules relating to the approval of outbound investments with the aim to simplify the approval procedures set out in the Tentative Measures for the Administration of Approval Outbound Investment Projects.

In essence, the new rules (which apply to State owned enterprises and PRC private investors):

    - will encourage expansion of the scope and scale of overseas investments, encouraging outbound investment in the transportation and infrastructure projects; and 
    - simplify the approvals procedures, including removing the need for prior reporting to the NDRC of investments below US$100 million.

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