Screening of acquisition to tighten (Shenzhen Daily) Updated: 2006-06-19 10:21
Worried that it may be selling industrial assets to foreigners too cheaply,
China will tighten screening of deals and impose new curbs on foreign
acquisitions in its heavy industry, a Beijing-funded newspaper said.
A ministry-level committee under the State Council, or cabinet, will be set
up to conduct the screening, Hong Kong's Wen Wei Po reported in an article
published on the Chinese finance ministry's Web site Friday.
New restrictions will be imposed on foreign purchases of controlling stakes
in strategic industries including steel and the manufacturing of equipment for
shipbuilding and power generation, the report quoted unnamed sources as saying.
"Government departments and experts are concerned that the wave of
large-scale foreign acquisitions may endanger national security, and believe
restrictions and limits should be placed on purchases of domestic companies by
foreign capital," it said.
Acquisitions are a large part of the tens of billions of dollars of foreign
investment flowing into China.
Foreign purchases of Chinese companies were worth US$7.3 billion in the first
half of 2004 alone, according to an estimate cited by the U.S.-China Business
Council.
But officials express growing concern that China may be hurting its
competitiveness by allowing foreign multinationals to buy major assets at cheap
prices. This concern is believed to have stalled or blocked some recent
attempted acquisitions in sectors such as steel and banking.
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