CHINA is set to ask companies planning to sell offshore debt with tenors longer than 1 year to get approval from the country’s top economic planning body, bringing greater enforcement to parts of longstanding guidance on overseas financing as concern mounts about dollar strength.

Companies including financial firms will be required to register, report and receive approval for such debt issuance with the National Development and Reform Commission (NDRC), according to a draft for comments posted on the NDRC website and dated Aug 26. The opinion consultation period is from that day to Sep 26.

The latest requirements are part of the government’s bid to promote the “healthy and orderly development of companies’ overseas financing” and prevent foreign debt risks, the draft said. It comes after the NDRC said in January that it would actively guide companies to “optimise the structure of their foreign debt interest rates and maturity”.

A debt crisis in the property sector has pushed China offshore defaults to a record US$37.3 billion this year, data compiled by Bloomberg show. At the same time, surging yields globally and dollar strength have fuelled concerns about outflows. China took the most aggressive step in its recent battle to push back against a weaker yuan on Tuesday (Aug 30), with the central bank setting its reference rate for the currency with the second strongest bias on record.

The latest move is expected to “further improve the legal basis for the supervision of medium and long-term foreign debt of Chinese companies”, partners at law firm King & Wood Mallesons including Zhou Hao wrote in a note dated Monday. Prior to this, companies were only required to register their offshore bond issuance plans with the NDRC. BLOOMBERG