Non-financial ODI down 29.4%
Number of ‘irrational’ acquisitions seen declining
China’s overseas investment saw a significant decline in 2017, with “irrational” acquisitions by domestic firms being effectively contained, the Ministry of Commerce (MOFCOM) said Tuesday.
China’s total outbound direct investment (ODI) from the non-financial sector decreased by 29.4 percent year-on-year to $120.08 billion in 2017, data from MOFCOM showed on Tuesday.
ODI by Chinese companies in 59 countries along the routes of the Belt and Road (B&R) initiative amounted to $14.36 billion in 2017, accounting for 12 percent of the country’s total in global markets, up 3.5 percentage points year-on-year, according to MOFCOM.
The positive ODI growth in the last two months of 2017 was largely thanks to increased investment in business services, retail, manufacturing and the information sector, which helped narrow the whole year’s ODI decline, Han Yong, commercial counselor from the ministry’s department of outward investment and economic cooperation, said Tuesday.
No new Chinese investments were made in the property or sports and entertainment industries during those two months, the ministry noted.
In a document released in August, the State Council, China’s cabinet, said overseas investment in areas including real estate, hotels, cinemas, and entertainment would be limited by setting stricter rules and guiding companies to make more careful decisions in overseas investment.
In 2017, Chinese firms performed actively in mergers and acquisitions (M&As), signing deals worth a total of $96.2 billion in 49 countries and regions.
Xia Xianliang, a research fellow at the National Academy of Economic Strategy under the Chinese Academy of Social Sciences, told the Global Times on Tuesday that private investment in overseas markets is likely to continue rising in 2018 as the regulator will maintain an open stance.
But foreign investment by Stateowned capital will be more cautious in a bid to stem capital outflows and rein in risks, Xia said.
“International industrial cooperation along the B&R routes is set to be further promoted this year,” Xia said, noting that acquisitions related to advanced technology or good brands in developed countries and regions such as the US and EU will be encouraged.