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China has stepped up financial management of overseas investments made by state-owned enterprises (SOEs) in efforts to improve returns and control risks, the Ministry of Finance said Wednesday.
A guideline that took effect Tuesday will standardize the financial management of SOEs throughout the investment process and tackle key issues including poor project feasibility and lack of risk management, the ministry said in an online statement.
The guideline clarified the financial management responsibilities on these of investments, asking SOEs to assign a specific person from top management to oversee each venture.
The guideline also requires SOEs to set rules on feasibility and financial due diligence, making sure projects are financially viable before decisions are made.
The guideline mandates that SOEs focus on risk factors including growth prospects, financial environment, and policy stability of the country where the investments are located.
It also requests SOEs to control costs, register foreign currency transactions and maintain accounting records throughout the whole process.
Financial authorities should establish databases on financial reports of overseas investments by SOEs, in order to analyze and monitor financial operations and improve policies based on the data.
The guideline applies to both central and local SOEs. Financial SOEs will follow separate rules to be released later.
China's SOEs have been at the forefront of overseas investment. As China pushes the Belt and Road Initiative and encourages companies to go abroad, overseas investments by SOEs are becoming diversified and higher-end, the ministry said.
China saw its outbound direct investment (ODI) shrink by 42.9 percent in the first half of this year as authorities managed to contain irrational ODI, Qian Keming, vice minister of commerce, said at a press conference earlier this week.
(CGTN)
