(Bloomberg) -- Chinese regulators have been asked to exercise greater caution when it comes to reviewing new overseas spending and investment plans amid concerns among senior leaders that higher US interest rates could spur capital outflows, according to people familiar with the matter.
State-owned companies were similarly told that they should be cautious when spending and investing overseas, said the people who asked not to be named because they’re not authorized to discuss the matter publicly. No specific targets or limitations have been set on such expenditure abroad, they said.
China’s Ministry of Commerce, the State-owned Assets Supervision and Administration Commission and the State Administration of Foreign Exchange didn’t immediately reply to Bloomberg requests for a comment. The three regulators oversee foreign investments at Chinese firms.
The move signals authorities’ concern over capital outflows as China’s economy slows under the weight of its Covid Zero approach to the pandemic, making it challenging for the government to meet its 5.5% growth target for the year. A widening monetary policy gap with the US, as Federal Reserve further hikes rates is also exacerbating outflows.
The onshore yuan was little changed at 6.7199 per dollar on Wednesday. The currency has fallen more than 5% so far this year after gaining 2.7% in 2021. Global funds sold China’s sovereign bonds for the fourth straight month in May, the longest stretch of monthly outflows since 2014.
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