China: New rules to de-risk investments

China has asked State-owned financial institutions to remain focused on their main business and eliminate unnecessary operational hierarchies, while stepping up efforts to prevent risks from the inappropriate transactions of affiliates and false capital injection, the Ministry of Finance said on Wednesday.

State-owned financial institutions that are engaged in overseas investment and have subsidiaries abroad should focus on their main business, follow the necessary prudential and compliance requirements, and strictly implement the due diligence and feasibility requirements, the ministry said in a notice.

The notice is an indication that the central government is tightening scrutiny of State-owned capital investment, as financial risks and fluctuations are increasing due to the slower economic growth since the COVID-19 pandemic and the rise in new cases in some major Western countries, experts said.

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(Picture: REUTERS)

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