An unwelcome but needed brake on investment abroad
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.