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Speed Up Reform on Outbound Investment Administration System
2015-11-04
By Zong Fangyu & Hu Jiangyun, Development Research Center of the State Council
Against the backdrop of China's rising global significance, outbound investment is playing an increasingly important part in the building of China's open economic system. However, China's outbound investment administration system is lagging behind the times and fails to meet the demands of new changes. Therefore, China should speed up reform on its outbound investment administration system to enhance its global competence in overseas investment. Before the reform, we need to review the current performance of China's outbound investment administration system and remaining problems and work out relevant policy options for improvement of this system. Since the convening of the 3rd Plenary Session of the 18th CPC Central Committee, the outbound investment administration system has mainly been managed on a record-keeping basis with approval as a supplement. And system building related to areas such as examination and approval, financing, ex-post management and risk prevention and control have all been improved to certain degree. But there are still some issues restricting the rapid growth of overseas investment, including 1. A complicated examination and approval system such as repeated examination and approval by multiple departments with a longer time for review and approval and a number of restrictions imposed on enterprises' overseas investment. 2. Due to an inadequate number of overseas branches and limited financing service items, China-funded banks could not provide sufficient support to enterprises for their drive to go global and financial service institutions could only render little support to small and medium-sized enterprises because of inadequate financing channels. 3. Imperfect outbound investment anti-risk mechanism, underdeveloped commercial insurance system for overseas investment and the deficient efforts made by China's insurance institutions to expand their overseas presence. 4. A relatively vulnerable ex-post management system with belated ex-post supervision and equivocal definition of accountabilities of different departments. To tackle all these problems, policy options are proposed as follows: 1. Strengthen top-level design; 2. Further enhance legal systems and regulations for outbound investment and cooperation; 3. Supervise the overseas performance of state-owned and non-state-owned assets on a type-by-type basis; 4. Further improve service system for outbound investment.
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