China has unveiled new capital control regimes that will restrict and limit overseas investment by Chinese corporations. Similar to China’s crackdown on Wealth Management Products (WMPs) in October, analysts predict that the tightened regulations on overseas investment will increase the demand for Bitcoin.

In October, China introduced various regulatory frameworks to control the country’s $13 trillion worth of WMPs. Almost immediately after the announcement from the People’s Bank of China, the price of Bitcoin increased, surging by three percent overnight.

This month, the Chinese State Council is set to impose tighter controls and policies on overseas investment in an attempt to strengthen its economy and prevent capitals of local companies leaving the country.

The Wall Street Journal reviewed various documents submitted by the State Council and reported that a wide range of regulatory frameworks are planned to be passed by the State Council and the Chinese government in the upcoming weeks.

According to several sources, the Chinese government is particularly concerned with multi-billion dollar deals being formed and established outside the country. Considering the increasing debt to ebitda ratio of major Chinese companies, the government believes that limiting the capital of corporations within the country is of utmost importance to its economy.

WSJ states:

“Total overseas direct investment rose more than 50 percent to $145.9 bln in the first nine months of this year from the same time a year earlier, according to official data.”

Impact on Bitcoin Price

If passed, the newly introduced regulations on overseas investment will disallow companies from close investments and acquisitions worth more than $1 bln. Companies that already have overseas investment which surpasses the value of $1 bln will be subjected to the new capital controls, which are to be released before the end of 2016.

As it did with WMPs, analysts and financial media outlets, including Zerohedge, predict that the demand for Bitcoin will increase significantly. Once the regulations are passed, the impact on the price of Bitcoin could be similar to the effect that the crackdown on WMPs had on Bitcoin. If true, the price of Bitcoin may surge in the range of three to five percent, and based on current average market price, the price will most likely increase by another $20.