Jeffrey Sun Discusses China's Increased Scrutiny of Outbound Investment

Jie Jeffrey Sun, a corporate partner in Orrick’s Shanghai and Beijing offices, recently spoke with the South China Morning Post and The New York Times [subscription required] regarding a new policy in China that is designed to curb outbound investment. Among other restrictions, which are thought to be temporary, overseas payments of more than US$5 million will now have to be submitted to the authorities in Beijing for special clearance before being allowed to proceed.

Jeffrey told the South China Morning Post that as a result of the high capital outflow from China, some companies had front-loaded outbound deals in the expectation of tighter capital controls.

“China could fine-tune its policy in the future if it sees temporary curbs being overly tight,” he said. “Some deals would be delayed or even stifled amid tighter capital controls.”

The New York Times noted that there are already capital controls in China to restrict the movement of money out of the country. Jeffrey concurred, noting, “They are not changing the rules. It’s that, internally, they need to go through this extensive process.”