Guess Which Huge Asian Country Is Afraid of Capital Flight?

For years, China has encouraged its companies to make acquisitions overseas to gain access to new technology, brands, and management expertise. Under its “Go Abroad” policy, or zou chuqu, Beijing has loosened approval requirements for international deals and eased capital controls. In the first 10 months of 2016, outbound direct investment by Chinese enterprises reached $146 billion, up 53.3 percent from the same period a year ago, according to China’s Ministry of Commerce.

That push may stall as Chinese regulators redouble efforts to clamp down on capital flight amid concern that a weakening currency could further spur outflows. China is planning sweeping curbs on its companies’ overseas acquisitions, including barring most foreign investments of $10 billion or more, people with knowledge of the matter told Bloomberg in late November. Officials won’t approve requests to bring yuan overseas for conversion into foreign currency without a valid business reason, according to people with knowledge of new measures drafted by the People’s Bank of China. China’s bureaucrats have also weighed in publicly: We will “crack down on false overseas investment activities,” while ensuring “the legitimacy and authenticity of overseas direct investment,” the State Administration of Foreign Exchange said in a Nov. 29 statement reported by Xinhua, China’s official news agency.