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Business

China curbs 'irrational' outbound investment

China's non-financial investment in foreign countries has slumped considerably, figures from commerce officials have shown. The fresh data came as the government kept a tight grip on capital outflows.

China's non-financial investment abroad (ODI) decreased by a staggering 41.8 percent in the January-August period from a year earlier as authorities in the world's second-largest economy tightened rules for outflows meant to go into what officials had frequently called "irrational projects."

New legislation is part of the government's efforts to curb purely speculative transactions that have pressured the national currency.

China's State Council announced earlier this year that the country would limit overseas investment in property, hotels, entertainment, sports clubs and movie industries.

Big projects canceled

As a result, Dalian Wanda Group scrapped plans to buy Nine Elms Square in London, the latest setback for the Chinese conglomerate, and one connected with Beijing's tight controls on outflows.

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Also, at least two of HNA Group's overseas deals hit a hurdle as the company struggled to take money out of China.

In the first eight months of the year, ODI went into 52 countries involved in China's Belt and Road initiative, with outflows totaling $8.55 billion (7.2 billion euros) and accounting for 12.4 percent of overall ODI transactions.

By contrast, foreign direct investment (FDI) in China fell by 0.2 percent to $83.7 billion in the January-August period from a year earlier.

The slight decrease came despite the government's pledges it would further open up the economy to foreign investors, including allowing them to pump their money into previously restricted industries.

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hg/jd (Reuters, AFP)

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