The Chinese embassy in Cyprus has moved to reassure the country that “China will never set a restrictive policy only in Cyprus” in response to press reports about China’s new guidelines for promoting ‘healthy’ investment abroad and, in particular, restrictive measures related to investment in real estate.
In August, China’s State Council signed off on regulations targeting ‘irrational’ overseas investments in the property, entertainment and sports sectors, in a move that formally endorses patchwork restrictions that emerged last November, prompted by an unprecedented surge in outbound investment by Chinese companies in 2015 and early 2016.
In addition to the investment curbs that have rocked the global mergers and acquisitions industry, the State Council said it would encourage “capable enterprises” to invest in President Xi Jinping’s ‘Belt and Road’ initiative, which aims to promote infrastructure links across the Eurasian land mass and Africa.
The announcement also suggested that the crackdown on allegedly “blind” and “over-the-top” overseas acquisitions by private sector groups and state-owned enterprises, introduced quietly by the People’s Bank of China and other regulators late last year, will be maintained for the foreseeable future.
Chinese regulators feared that some companies were deliberately overpaying for trophy assets in an attempt to move money out of China, exacerbating capital flight. There have also been curbs on capital remittances by Chinese individuals as part of stricter enforcement of existing rules.
The Chinese Embassy stated that the aim of the new guidelines is to promote a sustainable, rational, smooth and sound development of investment abroad, as well as to neutralise possible fears and reaction to the influx of Chinese capital into foreign countries.
The guidelines include: “Investment in real estate abroad is in the restricted category, which means that the investment needs the approval of the competent authority, which will check the validity, authenticity and compliance of that investment”.
The Chinese embassy emphasised, however, that “as China and Cyprus enjoy deeply traditional friendship, good bilateral relations and ever closer economic and trade co-operation, it is undeniable that China will never set a restrictive policy only in Cyprus. On the contrary, the Chinese government actively supports the position that most Chinese enterprises use Cyprus’s competitive position, deepen mutually beneficial cooperation and make the best possible use of Cyprus’ position to expand their activities in the EU, the Middle East, Russian markets and beyond.”
“In recent years, we have seen a rapid increase in Chinese investment in Cyprus. Both sides have enjoyed fruitful cooperation in the fields of energy, telecommunications, shipping, ports, aviation, satellite, banking and tourism and have shown a positive and stronger dynamic for cooperation. China is always ready to continue working with its Cypriot friends to achieve mutually beneficial and profitable cooperation in areas such as electricity, science and technology, education, medicine, advanced equipment and infrastructure to enrich and to diversify their bilateral economic and trade relations.”
Finally, China ‘s embassy expressed gratitude to all its Cypriot friends for their continued attention and support, and declared its readiness to do its utmost to support Cypriot businesses to broaden their range of activities in China and to seek new opportunities for cooperation.
For more information and to find out how Sovereign’s office in Cyprus can be of assistance in respect of the acquisition of real estate in Cyprus or applying for a second passport (citizenship) or permanent residency in the EU, please contact George Ayiomamitis (Managing Director) or via phone on +357 25 733440.
