Ir­ra­tional buy­ing con­trols see ODI in­crease by 24.1% in Q1

China Daily (Hong Kong) - - BUSINESS - By JING SHUIYU jing­shuiyu@chi­nadaily.com.cn

China’s non-fi­nan­cial out­bound di­rect in­vest­ment surged 24.1 per­cent year-on-year in the first quar­ter this year, as strin­gent con­trols have reined in do­mes­tic com­pa­nies’ ir­ra­tional buy­ing spree, the Min­istry of Com­merce said.

Chi­nese in­vestors made $25.5 bil­lion of non-fi­nan­cial ODI in 2,023 for­eign en­ter­prises across 140 economies from Jan­uary to March, ac­cord­ing to a re­cent on­line state­ment re­leased by the min­istry.

“The struc­ture of ODI has been op­ti­mized, as strin­gent con­trols have ef­fec­tively reined in ir­ra­tional out­bound in­vest­ment,” the min­istry said.

Data showed the ma­jor­ity of Chi­nese out­bound in­vest­ment flowed into sec­tors such as leas­ing, min­ing, man­u­fac­tur­ing and in­for­ma­tion tech­nol­ogy ser­vices dur­ing the first quar­ter. ODI in the leas­ing and busi­ness ser­vice sec­tors ac­counted for ap­prox­i­mately one fourth of the to­tal.

In com­par­i­son, no new in­vest­ments were made in the prop­erty, sports and en­ter­tain­ment in­dus­tries in the same pe­riod, the min­istry said.

China’s out­bound di­rect in­vest­ment, af­ter peak­ing in 2016, saw a dras­tic re­duc­tion in 2017 amid the gov­ern­ment’s ef­forts to curb ir­ra­tional in­vest­ment over­seas that have brought po­ten­tial risks to over- all fi­nan­cial se­cu­rity.

China’s ODI in economies par­tic­i­pat­ing in the Belt and Road Ini­tia­tive climbed 22.4 per­cent year-onyear to $3.61 bil­lion in the first three months this year, the min­istry said.

Liu Zhiyuan, sec­re­tary gen­eral of Bei­jing-based Transcon­ti­nen­tal Re­search In­sti­tute, said Chi­nese com­pa­nies eye­ing over­seas ex­pan­sion in economies in­volved with the Belt and Road Ini­tia­tive need to share risk in­for­ma­tion and unite to build a risk-preven­tion sys­tem.

“Seek­ing en­hanced co­op­er­a­tion with lo­cal part­ners is an ef­fec­tive way for Chi­nese com­pa­nies to pre­vent po­ten­tial risks and lower op­er­a­tional costs,” Liu told China Daily. “The col­lab­o­ra­tion can be con­ducive to fu­el­ing lo­cal eco­nomic de­vel­op­ment and im­prov­ing the liveli­hood of lo­cal peo­ple.”

Data showed for­eign di­rect in­vest­ment in China reg­is­tered steady growth, as the coun­try made con­cen­trated ef­forts to im­prove the busi­ness en­vi­ron­ment and pledged a new round of open­ing-up mea­sures.

FDI into the Chi­nese main­land rose 0.5 per­cent year-on-year to 227.54 bil­lion yuan ($36.2 bil­lion) in the first quar­ter this year, ac­cord­ing to the com­merce min­istry. In par­tic­u­lar, for­eign cap­i­tal into China’s high-tech in­dus­try ac­counted for nearly one fifth of the to­tal FDI.

Huang Yong, di­rec­tor of the In­ter­na­tional Co­op­er­a­tion Cen­ter of the Na­tional De­vel­op­ment and Re­form Com­mis­sion, said China will con­tinue to open up and fa­cil­i­tate free trade and in­vest­ment, as cre­at­ing a sta­ble, fair and trans­par­ent busi­ness en­vi­ron­ment is one of the coun­try’s pri­or­i­ties to at­tract for­eign in­vest­ment.

Mea­sures will in­clude im­prov­ing laws and reg­u­la­tions in­volved with in­tel­lec­tual prop­erty pro­tec­tion, fur­ther open­ing up the fi­nan­cial in­dus­try, and ab­sorb­ing more for­eign cap­i­tal in the coun­try’s cen­tral, west­ern, and north­east­ern cities, Huang said in an ar­ti­cle.

Seek­ing en­hanced co­op­er­a­tion with lo­cal part­ners is an ef­fec­tive way for Chi­nese com­pa­nies to pre­vent po­ten­tial risks and lower op­er­a­tional costs.”

Liu Zhiyuan,

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