Off and on

Author: Brian Yap | Published: 24 Apr 2017

China is closing the doors to investment offshore. Some of its corporates risk being left behind

China's battle against capital flight has reached new heights. After years of encouraging corporates to buy foreign assets ranging from industrial and manufacturing companies to technology and entertainment groups, the country's government is changing its priorities. It has been putting the brakes on capital outflows and offshore growth – notably by reinforcing controls in place for foreign M&A transactions – and instead focusing on bulking up its falling foreign currency reserves.

The world's second-largest economy has, so far, seen tangible results of this strategy as its foreign exchange reserves increased by $7 billion last month – returning to the $3 trillion level – after falling to $2.9 trillion in January. But this level is still far behind the $4 trillion recorded in 2014.

And worryingly, China's crackdown on capital outflows is going further. It is...