Asia Society Policy Institute

Measures for the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) and developers and contractors that are central state-owned enterprises (CSOEs).

Offers specific measures to bolster SASAC's supervision, management, and promotion of overseas activities by CSOEs.

SASAC should:

• Improve legal compliance, financial supervision, assessment and allocation, audit inspections, and risk detection. 

CSOEs should:

• Ensure investments suit their own capital strength, financing ability, industry experience, management level, and ability to manage risks.
• Comply with the laws, regulations, rules, and cultural customs of China and host countries.
• Develop an overseas investment management system with the following elements:
  • Basic principles and decision-making procedures to follow.
  • Departments and decision-making bodies with relevant responsibilities defined by CSOEs.
  • A negative list system for projects; an information management system.
  • A risk management and control system.
  • A system for investment projects that have been completed, suspended, terminated, or withdrawn.
  • A post-project evaluation system.
  • An accountability system for investment violations; and an authorization, supervision, and management system for activities of the affiliated companies.

CSOEs should:

• Establish a pre-investment decision-making risk assessment system.
  • Entrust an independent third-party consulting agency to conduct a comprehensive assessment of the political, economic, social, cultural, market, legal, policy, and other risks of host countries for major projects.
• Strengthen public relations with the government, media, companies, communities, and other sectors of society in host countries. 
• Actively fulfill their social responsibilities. 
• Focus on cross-border cultural integration.
• Submit an annual report covering the progress of overseas investment projects, their impacts, and suggestions to address major problems to SASAC. 

CSOEs should:

• Establish and improve overseas investment management systems to clarify investment decision-making procedures; regulate behavior; and strengthen risk monitoring, management, and control.
• Utilize the professional services of domestic and foreign intermediaries to conduct in-depth feasibility studies and improve decision-making.
  • Carry out the necessary due diligence and asset appraisal or valuation procedures for equity investment projects.
• Report to SASAC for an investor review for overseas investment projects listed in the special supervision category of the negative list. Submit the following materials:
  • A report on the project investment.
  • Relevant decision-making documents of their company.
  • The project feasibility study report.
  • The project financing plan.
  • The risk prevention and control report.
• Establish and implement an evaluation and accountability system for overseas investment projects. 

SASAC should:

• Publish a negative list of overseas investment projects of central SOEs.
• Determine which projects are prohibited or require special supervision.
• Randomly supervise and inspect the decision-making, implementation, and impacts of major projects.

SASAC and CSOEs should jointly:

• Establish an investment information system covering monitoring, analysis, and management of projects and their risks in real time.