Has China reopened the capital outflows floodgates?

Via Credit Suisse:

While outbound Chinese M&A slowed in 2017, we expect it to accelerate in 2018. The almost singular focus on “stability” leading up to the 19th Party Congress resulted in increased capital controls and a fall in outbound M&A, in our view. This was in stark contrast to developments in 2016 when Chinese M&A was a considerable force in global capital markets with huge cross border deals announced. Authorities have more recently signalled that China Inc. is ready for more deals. Indeed, the state media recently noted that “…China is sending a signal that the country wants to further open up to the world and capital controls will not stop worthwhile outbound investment”.

After the Congress, Chinese authorities have proposed a number of measures to further reduce impediments for outbound deals. First, acquirers will be given more time and flexibility to gain government approval for their investments. Second, acquirers no longer need to obtain provincial government approval for deals. Only central government approval from the NDRC is required. Third, a number of foreign sectors are no longer deemed to be “sensitive” for acquisitions by Chinese companies. This includes Telecoms and Utilities (Figure 10). Finally, we believe the NDRC provided its implicit blessing for more outbound deals when it noted “…overseas investment has played a positive role in driving the transition of the domestic economy, deepening mutually beneficial cooperation between China and other countries.”.