An undated handout photograph shows OZ Minerals Ltd.’s headframe, right, and ore conveyor, left, at the Golden Grove operation in Western Australia.

China said it will make it easier for its companies to invest overseas as cheaper commodity and share prices encourage bargain-hunting in industries from autos to energy.

China announced US$22 billion in planned overseas spending last month, including a $19.5 billion investment in Rio Tinto Group, the world’s third-largest mining company. China’s outbound foreign direct investment may top inflows this year for the first time, Standard Chartered Plc. says.

“The ‘Going Out’ policy to encourage more of China’s firms to invest overseas has been in place for a number of years,” said Stephen Green, head of China research at Standard Chartered in Shanghai. “We believe that 2009 will be the year when it really gains some scale.”

In 2008, China’s overseas investment doubled to $52.2 billion, including financial-sector investment, according to the commerce ministry. This year, in February alone, the total was $65 billion, according to a tally by Standard Chartered.

Eighty-five percent of applications for outbound investment that previously needed central government approval would be handled by local authorities in the future, Yao said.

Energy, minerals

The commerce ministry would scrutinize investment plans of more than $100 million and those which involve multiple countries, the ministry said in a separate statement. Provincial commerce authorities would vet smaller deals and those involving energy and minerals, it said.

China’s Minmetals Group is awaiting shareholder and government approvals for a A$2.6 billion ($1.7 billion) takeover of Melbourne-based OZ Minerals Ltd., the world’s second-largest zinc mining company.

Hunan Valin Iron & Steel Group agreed in February to buy a A$1.2 billion ($776 million) stake in Australia’s third-largest iron ore exporter Fortescue Metals Group Ltd. to secure supplies of the raw material.

China Shipping (Group) Co., the nation’s second-biggest marine cargo company, said last week it was looking for opportunities to buy assets overseas as shipping lines and port operators struggle with slumping world trade.

A strong currency, cheaper commodity prices and the need for many foreign companies to pay off debt are creating “the perfect opportunity” for China’s firms to ramp up investment abroad, Standard Chartered’s Green said.

‘Flurry of deals’

“The beginning of 2009 has seen a flurry of deals in which Chinese investors have secured ownership or long-term supply contracts to such things,” he added.

Cnooc Ltd., China’s biggest offshore oil explorer, is seeking opportunities to acquire overseas assets made cheaper by the global financial crisis, chairman Fu Chengyu said March 5. China, the world’s second-largest energy consumer, entered into oil-for-loans accords with Venezuela, Brazil and Russia last month.

Automakers are being encouraged to make overseas acquisitions, according to Vice Minister of Industry and Information Technology Miao Wei.

Monday’s announcement came after the government said last week that it would simplify approvals for overseas capital entering the nation by giving local governments more authority to approve such spending.

More outbound investment “will help improve China’s balance of payments while [it] is still running a relatively large trade surplus,” Yao said.

Foreign direct investment in China fell 15.8 percent in February, the fifth straight monthly decline, as companies cut spending to weather the global financial crisis, the commerce ministry said Monday.

Source: Bloomberg