China will step up supervision of overseas investment risks - insurance regulator

BEIJING (Reuters) - China will strengthen its supervision of overseas investment risks and capital flows from insurance funds, the insurance regulator said on Monday, adding that it will urge companies to improve their risk monitoring systems.

100 Yuan notes are seen in this illustration picture in Beijing November 5, 2013. REUTERS/Jason Lee

China has cracked down this year on “irrational” overseas investment which it suspected was one way of disguising capital flight as the yuan currency weakened.

While the yuan has staged a sharp turnaround in recent months and outflows have dwindled, authorities have shown no signs of easing their campaign. The state council said in August that China will limit overseas investment in property, hotels, entertainment, sports clubs and film industries.

The China Insurance Regulatory Commission (CIRC) will step up supervision over the use of insurance funds, with focus on “chaos” such as irrational stock market fundraising and overseas acquisitions, said Guo Jing, vice head of the finance and accounting department of the CIRC.

“The regulator will prevent risks stemming from an excessively rapid growth in overseas investments, via window guidance from authorities and stepped-up information disclosure,” he said.

Some overseas investments have been derailed due to heightened official scrutiny. Dalian Wanda Group said last month that it had scrapped plans to buy Nine Elms Square in London, the latest setback for the Chinese conglomerate.

The insurance regulator will also urge insurance companies to conduct self-checks on their property investments, said Guo.

It will continue to strictly control insurance money from flowing into property markets and prohibit funds to directly or indirectly invest in commercial buildings, added Guo.

Guo also said CIRC will prevent risks stemming from peer-to-peer (P2P) lending and internet finance from spilling over onto the insurance industry.

Peer-to-peer platforms help link up individual or institutional investors looking to invest their cash with borrowers including small- and medium-enterprises, students and other individuals that need funding.

Reporting by Ma Rong and Beijing Monitoring Desk; Writing by Stella Qiu; Editing by Michael Perry and Kim Coghill