Chinese regulators started for a while now severe scrutinizes regarding the majority of business moguls in the country. Many CEOs are disappearing without notice just to return to work later as if nothing happened. This time, authorities turned to banks that have to deliver reports regarding last year’s unexpected spree of outbound takeovers. This investigation may bring a Chinese damaging business medium closer to its end.
President Xi Jinping Is Determined to Put a Stop on Chinese Damaging Business Medium
The China Banking Regulatory Commission has recently asked some banks to reveal details on their transactions regarding overseas loans. Some of the involved companies are Anbang Insurance Group Co, AC Milan, Fosun International Inc, Dalian Wanda Group Co, and HNA Group Co. These sudden inquiries appeared after an investigation into the chairman of Anbang was made public.
The President of the People’s Republic of China, Xi Jinping, has shown through numerous decisions that he is determined to put an end on the damaging business medium. On top of that, there is a leadership reshuffle for later this year, which means that Jinping wants to see results of his projects faster than before. So far, the President ordered some restrictive capital controls. As a consequence, there were 56% fewer outbound takeovers than last year.
Lack of Transparency Among Chinese Companies Can Lead to Serious Negative Consequences
China is currently interested in persuading more foreign investors to join its markets. On top of that, authorities want to keep more assets internally. The country has just scored a new success as domestic stocks were allowed in MSCI’s benchmark emerging markets index. However, despite any piece of good news, the lack of market transparency and regulations in the country are damaging the business environment.
Therefore, regulators are inspecting how Chinese companies managed to close major deals overseas based only on borrowing money. Such activities can be extremely dangerous for the national economy. There are many sources of risks in these deals that can collapse an entire business. The International Monetary Fund described Chinese corporations as parties with no efficiency in their investments. Their financial performance is continuing its deficiency which puts great strain on banks.
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