BEIJING (AP) — China's government is moving to curb domestic companies' investments abroad in property, sports, entertainment and other fields, following a series of high-profile, multibillion-dollar acquisitions by Chinese firms.
A document released Friday by the State Council, China's Cabinet, was the latest move by regulators to tap the brakes on a string of foreign acquisitions, citing concerns that the companies involved may be taking on too much debt.
One of those conglomerates, Wanda Group, became the world's biggest cinema operator with its purchase of a majority stake in U.S. chain AMC in 2012 for $2.6 billion. It added rival Carmike Cinemas Inc. last year in a $1.2 billion deal and also bought film production house Legendary Entertainment for $3.5 billion.
The Cabinet document limits overseas investments in areas such as hotels, cinemas, the entertainment industry, real estate and sports clubs. It also bans outright investments in enterprises related to gambling and the sex industry.
At the same time, it encourages companies to plow money into projects related to the "Belt and Road" project, President Xi Jinping's signature foreign policy initiative that seeks to link China with other parts of Asia and eastern Europe through multibillion dollar investments in ports, highways, railways, power plants and other infrastructure.
"There are great opportunities for our nation's companies to embark on foreign investment, but they also face numerous risks and challenges," the document said. Through the new guidance, the government hopes to promote the "rational, orderly and healthy development of foreign investment while effectively guarding against risks," it said.
As part of his drive for stronger government leadership over the economy, Xi has been moving to reassert control over top state enterprises while reining in sprawling conglomerates including Wanda, Anbang Insurance, Fosun International and HNA Group that have expanded rapidly through debt-fueled foreign acquisitions such as New York's famed Waldorf Astoria Hotel.
Authorities told banks Wanda's recent foreign transactions conflicted with restrictions on capital movement and the company announced on July 10 it would sell most of its theme parks to a Chinese buyer, Sunac China Holdings Ltd., for 63.2 billion yuan ($9.3 billion).
Wanda agreed in November to pay $1 billion for Dick Clark Productions, which produces the Golden Globes and the "Miss America" pageant. The seller, Eldridge Industries, called off the deal in March, saying Wanda failed to complete the purchase.