(Yicai Global) Aug. 11 -- Overseas acquisitions in which Chinese companies use their financial leverage pose a great risk to national financial security, so government guidance is necessary, People's Daily quoted Hu Yijian, professor at the Shanghai University of Finance and Economics, as saying today.

Chinese outbound investment is mainly financed by domestic bank loans, Hu said. Foreign investment involves risks, and bad decisions could affect China's financial security. Some firms hold assets denominated in foreign currencies and debts in local currency and move significant sums abroad via overseas investment channels, leaving risks at home.

People's Daily questioned massive overseas investment by some Chinese companies in areas they do not specialize in July, singling out well-known firms including Suning Commerce Group Co. [SHE:002024] and Dalian Wanda Group. Suning bought a 70-percent stake in Italian soccer club Inter Milan for USD317.5 million (EUR270 million) in June last year. Wanda purchased a 20-percent stake in the Atletico de Madrid football club for EUR45 million in 2015.

"Chinese firms lack foreign investment experience and professional talents," said Bai Jingming, vice president of the Chinese Academy of Fiscal Sciences. "The government should further improve investment mechanisms and provide alerts on irrational investment."

China's outbound direct investment fell 42.9 percent annually in the first half of this year, and irrational overseas investment was effectively reduced, Qian Keming, the country's vice commerce minister, said at a State Council Information Office press conference. Investments to countries along the Belt and Road route and to the real economy decreased substantially less the overall decline in outbound investment, and investments as a whole were stable.

The country's overseas investment policy has remained unchanged and the government encourages capable companies to explore markets abroad to integrate into the global industrial chain and optimize their investment portfolio, People's Daily said.