China's Ministry of Commerce announced new regulations this week that significantly reduce red tape for Chinese firms looking to invest abroad. By making it easier for domestic companies to expand internationally, the Chinese government hopes to dampen objections to its currency controls and win points with its disgruntled trading partners, for whom the outward flow of capital will no doubt be a welcome development.

 

The Ministry of Commerce has made it possible for overseas investment applications to be processed and approved through its web site, and it will discontinue the practice of scrutinizing the feasibility of each proposal. The softer regulations appear to be particularly aimed at encouraging smaller companies to expand beyond China. In addition to approval from the Ministry of Commerce, Chinese companies also must receive clearance from the State Administration of Foreign Exchange before investments can be made abroad.