Irrational buying controls see ODI increase by 24.1% in Q1
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.”