China announced on Friday formal rules on overseas investments that prevent “irrational” acquisitions of assets, including hotels, according to a Bloomberg report.
Authorities established three categories – banned, restricted and encouraged – with hotel investment falling into the restricted category. It also outlawed outward investments in gambling and sex industries, while backing support for the nation’s “Belt and Road” initiative.
“Profound changes are taking place in international and domestic situations, and Chinese enterprises face not just relatively good opportunities but also various risks and challenges in overseas investments,” the State Council, China’s cabinet, said in the statement.
Some of the more aggressive outbound investors are familiar to the hotel world, including Anbang Insurance Group Co., Fosun International Ltd., Dalian Wanda Group Co. and HNA Group Co. They have been singled out for their levels of leverage and further spotlighted more recently as China starts to restrict outbound investment to avoid further weakening of its currency.
The People’s Bank of China imposed controls as the amount of money flowing out last year topped US$816 billion, according to data compiled by Bloomberg.
The new policy reportedly also tries to close the loophole of suspicious capital outflows and possible money laundering.