After record deals last year, China reins in overseas investment

China - with a worried eye on money leaving its borders - is telling its companies to cool it down

China struck $225 billion in deals to acquire companies abroad last year, a record-breaking number that signaled to the world that Chinese business leaders were hot to haggle.

Now, China — with a worried eye on the money leaving its borders — is telling some of its companies to cool it down. On Saturday, in the strongest public signal yet that Beijing is changing course, China’s commerce minister castigated what he called “blind and irrational investment.” At a news briefing during the annual meeting of China’s congress, the minister, Zhong Shan, said officials planned to intensify supervision of what he called a small number of companies.

“Some enterprises have already paid the price,” said Mr. Zhong, a protégé of President Xi Jinping. “Some even have had a negative impact on our national image.” Just a day earlier, Zhou Xiaochuan, the country’s top central banker, had also questioned the wisdom of some recent Chinese overseas deals. “Some are not in line with our requirements and policies for overseas investment, such as in sports, entertainment and clubs,” he said. “This didn’t bring much benefit to China and caused some complaints overseas.”

The comments are the clearest confirmation that the government is hitting the brakes on the sometimes chaotic rush overseas by deep-pocketed Chinese companies with a reputation for having more money than deal-making aptitude.

“Are these guys in over their heads?” said Brock Silvers, a longtime investment banker in Shanghai. “The answer to me is, in some cases, they seem to be.”

A series of Chinese deals have come apart this winter — although it is not always clear whether Beijing stepped in or whether buyers themselves suddenly decided they were making a big mistake.

On Friday, the owners of Dick Clark Productions, which produces the Golden Globe Awards, said a $1 billion agreement to sell the company to the Chinese conglomerate Dalian Wanda had collapsed. Dalian Wanda, a real estate giant that has branched out into filmmaking and cinemas, had no immediate comment.

Chinese families and companies have been rushing to move money out of the country for more than a year amid worries over a slowing national economy, a weakening currency and numerous other problems. 

The outflow has been expensive — China has spent $1 trillion over the past two and a half years to shore up the value of its currency — and threatens to damage the country’s efforts to help its rising middle class.

©2017 The New York Times News Service