Mingtiandi Explains China Rule Changes to Investment Forum

China’s government took another major step towards liberalising cross-border transactions last week, and an audience of over 100 property professionals were in Shanghai to hear Mingtiandi founder Michael Cole explain the impact of this latest policy change at an international real estate forum on Friday, May 29th.

Cole’s talk was timed to coincide with the news, first released on Friday, that China’s State Council would soon be removing all restrictions on overseas investment in real estate, stocks and bonds by Chinese individuals and companies – a move which opens the door for a rapid increase in outbound capital flows from the mainland.

At the event, the China real estate investment analyst explained about how the State Council’s latest decision was part of a series of changes that have led to Chinese companies now investing more outside the mainland than they do at home. Cole made his address, “How China’s Government Supports Outbound Investment” to the crowd of real estate investors, consultants and brokers from more than 15 countries at the Juwai Agent Summit 2015 held at the Shanghai Portman Ritz-Carlton Hotel.

Policy Changes Since 2012 Help Drive Investment Boom

During the last three years China has gradually removed barriers to cross border capital flows and lifted ceilings on cross-border investment as the country moves toward greater integration with the global economy.

Cole highlighted how, starting with opening the door for investment funds to make acquisitions overseas in 2012, the government has subsequently moved on to reduce the role of regulatory agencies such as the National Development and Reform Commission (NDRC), the Ministry of Commerce and the State Administration of Foreign Exchange (SAFE) in authorising cross border deals.

This reduction in red tape, along with the increasingly prominent role of China’s state owned enterprises in leading the country’s outbound investment surge, led to the mainland committing $12 billion to US acquisitions in 2014, with real estate playing a growing role.

Predicting More Investment in the Future

Based on continuing liberalisations, such as the State Council’s newest decision, and on China’s determination to have the IMF certify the Renminbi as a reserve currency, Cole predicted greater economic freedom for Chinese individuals and corporations in the years ahead, especially with regard to international investment.

This growing liberalisation, combined with slowing economic growth, can be expected to lead to further investments overseas by China’s citizens as well as its legion of wealthy corporations.

For a PDF copy of Cole’s presentation at the Juwai conference, just click here.