An un­wel­come but needed brake on in­vest­ment abroad

China Daily (Canada) - - VIEWS -

As Chi­nese com­pa­nies are speed­ing au­da­ciously ahead with mas­sive cross-bor­der merg­ers and ac­qui­si­tions, it is frus­trat­ing for them to en­counter an in­creas­ing num­ber of red lights in someWestern coun­tries.

But while the for­eign reg­u­la­tory ob­jec­tions that have thwarted some high-pro­file Chi­nese deals may be eas­ily in­ter­preted as po­lit­i­cally-driven, they ac­tu­ally make an un­in­tended case for a timely and cool­headed re­viewof the on­go­ing surge in China’s over­seas in­vest­ment.

Lat­est of­fi­cial sta­tis­tics showed that China’s out­bound di­rect in­vest­ment jumped 53.7 per­cent year-on-year to 882.78 bil­lion yuan ($134.22 bil­lion) in the first three quar­ters of this year.

That means Chi­nese com­pa­nies have al­ready com­pleted more over­seasM&A projects in the first nine months of this year than the to­tal of last year in terms of trans­ac­tion value.

The speed of China’s out­bound di­rect in­vest­ment growth is re­mark­able. It turned from a net im­porter of cap­i­tal into a net ex­porter when its out­bound FDI sur­passed in­bound FDI for the first time in 2014, and it jumped to be the world’s sec­ond largest source of out­ward FDI last year. It is es­ti­mated by Dealogic, a com­pany that of­fers an­a­lyt­ics and tech­nol­ogy to in­vest­ment banks, bro­ker­age firms, and in­vest­ment ad­vis­ers, that so far this year, China has for the first time done more deals than the US, the top cross-bor­der ac­quirer since 2008.

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