Billion-dollar hotel developments in Sydney and Queensland, a shareholding in Virgin Australia, and the Australia’s biggest cinema chain will come under the scrutiny of Chinese regulators trying to rein in a US$215 billion ($284 billion) overseas buying spree by Chinese companies.
Dalian Wanda, headed by China’s richest man Wang Jialin, is among four Chinese companies targeted by the Chinese Banking Regulatory Commission’s directive to Chinese banks to provide information on the companies overseas investments in property, cinemas, hotels, entertainment and sports clubs.
Dalian Wanda’s property development ventures in Australia include a five star hotel project on the Gold Coast, Jewel, and the $1.2 billion Circular Quay project touted to have Harbour Bridge views, No.1 Sydney.
Dalian Wanda bought the Hoyt’s cinema chain two years ago, but ambitiously began a move into Hollywood last year, buying up Legendary Pictures for US$3.5 billion ($4.6 billion). A US$1 billion bid for Dick Clark Productions was scuttled this year as the Chinese government clamped down on capital flows out of the country and deal making it considered peripheral to a company’s main business.
An artist’s impression of the Jewel project at Broadbeach on the Gold Coast to be built by Brookfield Multiplex and developed by China’s Dalian Wanda.
At China’s annual congress in March, Commerce Minister Zhong Shan blasted what he said were “blind and irrational investments” by Chinese companies overseas.
There had been a flurry of buy-ups of international soccer clubs (Fosun International bought Wolverhampton Wanderers), hotel and entertainment deals. The focus on foreign acquisitions by the four large Chinese companies also comes against a backdrop of a regulatory crackdown on risky behaviour by banks, shadow-lending institutions and insurers.
Other companies now under scrutiny for their overseas deals include HNA Group, the parent of Hainan Airlines, which took 13 per cent of Virgin Australia in 2016. HNA also owns a $117 million tower on York Street in Sydney, and purchased the Aitken Hill Conference Centre in Melbourne in December for $120 million. It also owns hotel chain Hilton Worldwide.
Anbang Insurance, whose chairman was recently detained by Chinese authorities and which bought Strategic Hotels and Resorts for US$6.5 billion, and Fosun International, which bought soccer club AC Milan and has stakes in Club Med and Cirque du Soleil, are also having their loans scrutinised.
Chinese business magazine Caixin said banks have been asked to assess their credit risk and exposure to the companies overseas activities.
Hurun, which publishes China’s annual rich list, reported that Chinese enterprises made overseas direct investments and acquisitions totalling $US215.8 billion in 2916, an 148 per cent increase.
Australia was ranked as the fourth country for deals. Bloomberg reported that the tightening controls on Chinese companies moving money offshore saw a 56 percent drop in deals in 2017.
This year’s drop in announced deals is the biggest for a comparable period since the depths of the global financial crisis in 2009, according to data compiled by Bloomberg.