SASAC establishes Bureau of Overseas Foreign Investment Administration

The state asset regulator (SASAC) is tightening the leash on state-owned companies' (SOEs) overseas operations.

On April 8, SASAC established a new department – the Bureau of Overseas Foreign Investment Administration.

The bureau’s main responsibilities include (SASAC):

• Guiding central SOEs’ international operations and optimizing the allocation and structure of overseas assets
• Overseeing and supervising overseas assets
• Strengthening risk prevention and mitigation in overseas investment and operations
• Handling overseas emergencies and crisis response

Industry executives told Caixin the move signals the rising importance of overseas operations:

• “Foreign-related matters were previously dispersed across different business units and functional lines within SASAC.”
• “The consolidation suggests overseas operations are shifting from a supporting role to an integral part of core business.”

Get smart: The department should improve coordination of SOEs' overseas investment and operations, reducing destructive competition among Chinese firms in foreign markets.

Get smarter: For foreign governments and companies, this signals a more disciplined Chinese state-sector presence abroad.

• Tighter oversight of SOEs' overseas conduct, including stronger compliance with local regulations and accountability on corruption risks, could make Chinese SOEs more predictable counterparts.
• However, it also suggests Beijing is building the institutional capacity to push back more effectively when it perceives its firms are being treated unfairly.