ODI drops 41.8% after re­di­rect­ion

China Daily (USA) - - FRONT PAGE - By ZHONG NAN and REN XIAOJIN Con­tact the writ­ers at zhong­nan@chi­nadaily.com.cn

Min­istry says it found no new spend­ing in sport, real es­tate in first eight months

China’s out­bound di­rect in­vest­ment from non-fi­nan­cial sec­tors dropped 41.8 per­cent year-on-year to $68.72 bil­lion be­tween Jan­uary and Au­gust, as the coun­try halted ir­ra­tional in­vest­ment ac­tiv­i­ties since the end of 2016, the Min­istry of Com­merce said on Thurs­day.

The drop in the coun­try’s ODI dur­ing this pe­riod nar­rowed from the 44.3 per­cent year-on-year de­cline in the first seven months to $57.2 bil­lion.

Com­merce Min­istry spokesman Gao Feng said the gov­ern­ment found no ad­di­tional in­vest­ment in sports, real es­tate and en­ter­tain­ment busi­ness in the first eight months, and th­ese sec­tors are not easy to su­per­vise and pre­vent from crim­i­nal ac­tiv­i­ties.

“The ma­jor­ity of China’s ODI mainly, in the mean­time, en­tered sec­tors in­clud­ing com­mer­cial leas­ing, man­u­fac­tur­ing, wholesale and re­tail, in­for­ma­tion trans­mis­sion and tech­nol­ogy in the global mar­ket, in­di­cat­ing that the coun­try’s ODI struc­ture has fur­ther been op­ti­mized and be­come more com­mer­cial­ized and tech­nol­ogy-based,” said Gao.

“Chi­nese com­pa­nies are now pay­ing more at­ten­tion to phys­i­cal in­vest­ment as the de­clines in over­seas man­u­fac­tur­ing in­dus­tries were smaller com­pared to those in the prop­erty, cul­ture, sports and en­ter­tain­ment sec­tors,” said Ma Yu, a se­nior re­searcher at the Chi­nese Academy of In­ter­na­tional Trade and Eco­nomic Co­op­er­a­tion in Bei­jing.

Since late 2016, gov­ern­ment agen­cies such as the Sta­te­owned As­sets Su­per­vi­sion and Ad­min­is­tra­tion Com­mis­sion and the Min­istry of Com­merce have been re­in­forc­ing in­spec­tion of au­then­tic­ity and reg­u­la­tion com­pli­ance of ODI to im­prove profit and con­trol risks.

In the lat­est ef­forts, the cen­tral gov­ern­ment de­cided to limit ODI by do­mes­tic com­pa­nies in sev­eral fields, in­clud­ing real es­tate and sports clubs, while en­cour­ag­ing them to in­vest in in­fra­struc­ture and new tech­nol­ogy.

Com­pa­nies from China in­vested in 4,789 firms in 152 coun­tries and re­gions from Jan­uary to Au­gust and signed $149.57 bil­lion in new con­tracts for over­seas pro­jects, a rise of 12.7 per­cent year-on-year.

The min­istry said China will con­tinue to tighten its re­view of the au­then­tic­ity of over­seas in­vest­ment and its com­pli­ance with reg­u­la­tions, and guide more in­vest­ment into the real econ­omy and re­duce in­vest­ment in sec­tors in which Chi­nese com­pa­nies are not pro­fi­cient at man­ag­ing.

Mean­while, out­bound in­vest­ment to 52 economies in­volved in the Belt and Road Ini­tia­tive stood at $8.55 bil­lion, ac­count­ing for 12.4 per­cent of to­tal ODI, up 4.3 per­cent­age points year-on-year.

“The in­fra­struc­ture de­vel­op­ment re­lated to the ini­tia­tive will re­quire a high de­gree of co­or­di­na­tion be­tween and among states, the pri­vate sec­tor and the civil so­ci­ety, as well as vast in­vest­ments of cap­i­tal and ma­te­rial re­sources,” said Zhang Yan­sheng, deputy di­rec­tor of the ex­pert com­mit­tee of the China Coun­cil for the Pro­mo­tion of In­ter­na­tional Trade.

“There­fore it is nec­es­sary for govern­ments and com­pa­nies en­gaged in the ini­tia­tive to have a clear un­der­stand­ing of the key fac­tors in driv­ing suc­cess.”

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