24 July 2026

Following the coming into force of the Regulations of the State Council on Outbound Investment (State Council Order No. 837) on 1 July 2026, there has been widespread discussion that China has prohibited its nationals from purchasing overseas properties or investing overseas. This has understandably raised concerns among Malaysian property developers, vendors, investors and professionals dealing with Chinese purchasers.

Our review of the new Regulation indicates that this common understanding is not entirely accurate.

The New Regulation

The Regulations of the State Council on Outbound Investment (国务院关于对外投资的规定) were signed by Premier Li Qiang on 5 May 2026, published on 1 June 2026, and came into force on 1 July 2026. It is China's first comprehensive administrative regulation governing outbound investment and establishes an overarching legal framework for overseas investments by Chinese investors.

The Regulation applies to all investors within China, including:

enterprises;
other organisations; and
resident individuals.

"Outbound investment" is broadly defined to include direct or indirect acquisition of ownership, control, management rights or other interests in overseas enterprises or assets through capital contributions, financing, guarantees or other means.

Does the Regulation Prohibit Overseas Property Purchases?

No.

There is no provision in State Council Order No. 837 which expressly prohibits Chinese citizens from purchasing residential or commercial properties outside China.

Likewise, the Regulation does not prohibit Chinese nationals from investing in overseas companies or businesses. Instead, it introduces a comprehensive regulatory framework governing outbound investments, including approval requirements, filing obligations, national security considerations and compliance with existing foreign exchange and other regulatory regimes.

The Real Issue: Cross-Border Transfer of Funds

Although the Regulation itself does not prohibit overseas acquisitions, it also does not create a new right for individuals to transfer funds out of China for overseas investments.

Article 12 requires investors to comply with applicable approval, filing, information reporting and cross-border fund registration requirements. In addition, Article 14 expressly provides that matters relating to foreign exchange, cross-border fund transfers and other regulatory issues continue to be governed by existing laws and regulations.

More importantly, Article 33 provides that the detailed rules governing outbound investments by resident individuals are to be separately formulated by the competent authorities. As at the date of this article, no general implementing measures have been introduced permitting resident individuals to freely remit domestic funds for overseas investments.

Can a Chinese Individual Transfer Money Overseas to Purchase Property?

In practice, the principal difficulty remains China's long-standing foreign exchange control regime, rather than the new Regulation itself.

A mainland Chinese resident generally cannot convert Renminbi and remit funds from China for the purpose of purchasing overseas real estate merely by relying on the annual personal foreign exchange quota. Existing foreign exchange rules continue to restrict the use of personal foreign exchange purchases for overseas property investments.

Accordingly, while a Chinese national may legally own Malaysian property under Malaysian law (subject to Malaysian foreign ownership requirements), the purchaser may encounter practical difficulties in remitting the purchase price from mainland China through ordinary banking channels.

What About Investing in Overseas Companies?

The position is broadly similar for individual investments into overseas businesses.

The new Regulation recognises resident individuals as potential outbound investors but does not establish a general mechanism allowing individuals to remit domestic personal funds to establish or acquire overseas companies.

By contrast, genuine outbound investments undertaken by Chinese enterprises continue to be capable of proceeding through the established outbound direct investment (ODI) approval and filing framework, subject to compliance with the applicable approval, filing, foreign exchange and regulatory requirements.

Practical Implications for Malaysian Businesses

For Malaysian property developers, vendors and businesses dealing with Chinese investors, the legal issue is often not whether the purchaser may own the asset, but whether the purchase funds can be lawfully remitted from mainland China.

Where transactions involve purchasers or investors from mainland China, parties should consider:

verifying the source of investment funds at an early stage;
understanding whether the investment is made by an individual or through a Chinese corporate vehicle;
avoiding assumptions that personal foreign exchange quotas may be used to fund overseas investments;
allowing sufficient time for regulatory approvals (where applicable); and
conducting appropriate anti-money laundering and source-of-funds due diligence.

Conclusion

The coming into force of State Council Order No. 837 on 1 July 2026 does not amount to a blanket prohibition on overseas property purchases or overseas investments by Chinese nationals.

Instead, the Regulation establishes China's first comprehensive legal framework governing outbound investments while preserving the existing foreign exchange and regulatory approval regime. For cross-border transactions involving Chinese investors, the practical challenge remains the lawful movement of investment funds out of mainland China rather than the legal capacity to acquire overseas assets.

This article is intended for general information only and does not constitute legal advice. Specific advice should be obtained based on the facts and circumstances of each transaction.

2026年7月24日

自中国国务院发布的**《国务院关于对外投资的规定》（国务院令第837号）于2026年7月1日**正式施行后，坊间广泛流传中国已禁止中国公民购买海外房地产或进行海外投资。此消息引起不少马来西亚房地产发展商、卖方、投资者及专业人士的关注，尤其是涉及中国买家的跨境交易。

经本所研究及审阅有关法规后，我们认为，上述说法并不准确。