China boosts oversight of overseas SOE deals

China has issued regulations to strengthen scrutiny over overseas investment by state-owned enterprises (SOEs) as part of the government’s ongoing fight against capital outflows and financial risks, Caixin reports. Officials will be held accountable for decisions that led to financial losses if the officials were negligent in performing their duties or where deals were done in violation of regulations, the Ministry of Finance said on Wednesday. The new rules also require companies to conduct thorough due diligence into the economic, industrial, tax, legal, political and other risks of an overseas project before investing. The ministry said that SOEs have been leading the way in implementing China’s “go out” strategy. However, some of the deals have had low returns on investment and anemic profitability, mainly due to careless decision-making done without solid feasibility analysis, weak financial risk management, and a lack of post-investment supervision, it said.