BEIJING: China will strengthen rules to defuse risks for domestic companies investing abroad and curb “irrational” overseas investment in its ‘One Belt, One Road’ (OBOR) initiative, the state planner said on Friday.

The National Development and Reform Commission (NDRC) said in an online statement lauding the Belt and Road initiative that it would provide better guidance on risks to companies investing overseas in order to prevent “vicious” competition and corruption.

The initiative is aimed at building a modern-day Silk Road, connecting China by land and sea to Southeast, South and Central Asia, and beyond to the Middle East, Europe and Africa.

The state planner cited unspecified security risks for Chinese companies investing abroad. The NDRC did not give more details about how it planned to strengthen rules or why it was concerned about corruption and unhealthy competition between companies. Also on Friday, the cabinet issued new guidelines to regulate overseas investment as the government looks to support capable firms investing overseas while restricting or banning deals in certain sectors.

“(We will) guide firms to fully consider national conditions and actual needs of target countries, pay attention to mutually beneficial cooperation with local governments and companies, and generate economic and social benefits,” the State Council said in a statement.

Mergers and acquisitions by Chinese companies in countries linked to the OBOR initiative have been growing at a rapid rate, even as the government takes aim at China’s acquisitive conglomerates to restrict capital outflows.

Unveiled in 2013, the OBOR initiative has also come with some security concerns for China. The largest deal in an OBOR country this year was a Chinese consortium’s $11.6bn buyout of the Singapore-based Global Logistics Properties.

Chinese acquisitions in the 68 countries officially associated with President Xi Jinping’s signature foreign policy totalled $33 billion as of Aug 14, surpassing the $31bn for all of 2016, according to Thomson Reuters data.

Lawyers and dealmakers had told Reuters that companies were enjoying a relatively smooth approval process for Belt and Road-related deals as regulators tended to classify them differently when reviewing outbound investments.

China has tightened outbound capital controls and cracked down on overseas deals it sees as risky, putting pressure on acquisitive conglomerates like Anbang Insurance Group , HNA Group, Dalian Wanda Group and Fosun International Ltd (0656.HK). In the statement Friday, the NDRC cited projects such as a high-speed railway in Indonesia and a crude oil pipeline between southwest China and Myanmar as examples of how the initiative was advancing.

Published in Dawn, August 19th, 2017