Investors look across Atlantic for better prospects
Trade frictions between China and the United States will continue to drive Chinese capital to Europe and such a trend is unlikely to change in the second half of 2018, said experts.
“Under US President Donald Trump’s protectionist policy, Chinese investors are losing their confidence in the North America market,” said Zhang Yuyan, director of the Institute of World Economics and Politics at the Chinese Academy of Social Sciences.
The comment came after global law firm Baker McKenzie and research provider Rhodium Group reported that the value of Chinese companies’ newly announced merger and acquisition activities in Europe in the first half of 2018 reached $22 billion, nine times greater than the amount in North America, which was $2.5 billion.
During the same period, the value of completed Chinese outbound direct investment reached $12 billion, six times the amount in North America, 16.8 which was $2 billion.
Chinese ODI in North America hit a nine-year low in the first half of the year, with a 92 percent yearly decline to $2 billion. “Deal activity is depressed in both the US and Canada,” the report said.
According to data released on Tuesday by the Ministry of Commerce, Chinese investors made $57.1 billion of non-financial direct investment in 3,617 overseas companies in 151 countries and regions in the first six months of 2018, up 18.7 percent.
Investment in countries and regions involved in the Belt and Road Initiative increased 12 percent, reaching $7.4 billion.
“The cost of investing in the US has been increasing. Together with the escalating trade tensions and the noise the Committee on Foreign Investment in the United States has been making, Chinese investors are losing confidence in the US,” Zhang said.
“Compared to the US, Europe has a relatively more welcoming market and better investment environment, although they also have some friction with China,” Zhang added.
Zhang said if the US can act “rationally” in the future, the two parties could put bilateral
10.8
25.5
57.18
investment relations onto the right track, but “according to what is happening right now, such a change is unlikely to take place in the next six months of 2018,” he said.