China Slowing Down the Ball and Concentrating on the Silk Road

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China has a greater plan, and that was yet again reminded to all of us earlier this month when the State Council released new regulation aiming to put a stop to any “irrational” outbound direct investments. Purchasing sports clubs or movie studios, investing in entertainment or in gambling, in hotels or properties that don’t have any relation to the investor’s main business, doesn’t help in any way the most important project for China – the development and promotion of the “One Belt, One Road” (OBOR) initiative and Beijing insists on being very clear that is a problem.

The concept of mutual benefit for both parties is in the center of the newly issued act. We can clearly see the differentiation of the outbound investments in three “categories”- favored, limited and prohibited. The Regulation encourages cooperation in the fields of agriculture, high-tech, R&D centers, logistics, exploration and development of oil and gas, mineral and other energy resources, and of course – the promotion of OBOR. Investing in real estate and hotels, sports, film and entertainment, and in projects that do not comply with environmental standards is restricted. Banned industries include those regarding the military, the gambling, and the pornography.

Does this mean that the next Roman Abramovich is not going to be Chinese? Now, that is yet to be seen, as we don’t have clear answers how the new restrictions will be implemented and executed. Another fact to be reminded and considered is that in May 2016 China released its 13th five-year plan which states that by 2020, the total scale of the sports industry should amount to over 3 trillion RMB and it should comprise 1% GDP. We may conclude that the sports development will continue, but this time in “rational” dimensions.

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Pronunciation : bēi Meaning : (measure word) cup HSK : 1 Notes : Also as also as 杯(子) Related Word : 杯子 杯 Pronunciation : bēi Meaning : (noun) cup