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China's centrally-administrated stated-owned enterprises will be refrained from making overseas investment in areas which are not their core businesses, according to a regulation by the nation's state assets watchdog.
The regulation, drafted by the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), aims to regulate and supervise central firms' overseas investment and will take effect as of May 1.
If central firms want to invest in non-core business overseas, they need to get approval from the SASAC first, the regulation said. The move is to avoid risks.
Bai Ming, a research fellow with the National Institute of the Ministry of Commerce, told the Economic Information Daily that what needs special attention is central firms' speculation overseas, as some projects, albeit with high profits, are often borne with huge risks.
China's central enterprises has stepped up overseas investment in recent years, but without a complete regulatory system or experienced talents, some projects end up with huge loss.
China Aluminum Inc, or Chinalco, ended with a deficit of as much as 340 million yuan ($53.9 million) due to an aborted bauxite mining project in Australia in 2011. In the same year, China Railway Construction Co suffered a profit loss of 4.15 billion yuan in a light rail project in Saudi Arabia.