SHANGHAI, March 17 (Reuters) - China's Ministry of Commerce has relaxed rules to make it much easier for Chinese companies to win approval to invest overseas, in the country's latest move to encourage its companies to go abroad.
China, the world's No. 3 economy and the biggest foreign owner of U.S. Treasury bonds, is keen to diversify the investments made using its nearly $2 trillion pool of foreign-exchange reserves, the world's biggest.
Although China is also turning more cautious in overseas investment after the global financial crisis left some firms nursing heavy losses in overseas acquisitions, outbound mergers and acquisitions by Chinese companies still leapt 64 percent last year to $47.8 billion, Thomson Reuters data showed.
Now according to new rules that take effect on May 1, local authorities under the Ministry of Commerce will have the power to give approval for most corporate overseas investment projects, the ministry said in rules published late on Monday on its website, http://www.mofcom.gov.cn.
The ministry will only retain the power to give approval for corporate overseas investment worth $100 million and above for a single project or investment in a country that does not have diplomatic relations with China, the rules said.
The rules apply to the establishment, mergers and acquisitions of only non-financial companies, the ministry said.
The official Shanghai Securities News said on Tuesday the changes meant 85 percent of Chinese foreign investment projects would be approved by local commerce authorities when the new rules come into effect.
The newspaper also quoted the ministry's spokesman, Yao Jian, as saying that most corporate overseas investment projects would be approved within three days of their application.
On March 5, Beijing also promulgated new regulations to devolve some authority for approving more foreign investment projects to local authorities, making it easier for foreign investors to set up shop in China.
Under these regulations, merger deals involving foreign investment in China in most sectors with a price tag below $100 million only need approval from local commerce authorities, rather than the ministry. Sectors where foreign investment is "forbidden" or "restricted" are excluded from the changes.
The easing comes amid a slowdown in inflows of foreign direct investment (FDI). China drew $13.37 billion in FDI in the first two months of this year, 26.2 percent less than in the same period in 2008. (Reporting by Lu Jianxin; Editing by Ken Wills)