China Tightens Scrutiny of Foreign Direct Investment
China tightened scrutiny of foreign direct investment to prevent “fake” ventures that the government said are acting as channels for speculative capital and endangering the world’s fastest-growing major economy.
Sham joint ventures and shell companies are among the conduits, the Beijing-based National Development and Reform Commission, said in a statement on its Web site today.
“Hot money” from investors attracted by a strengthening currency and interest rates at a decade high threatens to stoke inflation and destabilize the financial system in the event of sudden outflows. China’s foreign-exchange reserves, the world’s largest, soared 36 percent to $1.81 trillion as of June 30 from a year earlier.
Read also China to step up checks on FDI-related inflows by Reuters.