China’s overseas investment, property purchases slump as capital controls bite
BEIJING: China’s non-financial outbound direct investment (ODI) slumped in January and its offshore property purchases plunged after authorities tightened restrictions on capital outflows to support the ailing yuan currency and ease pressure on the country’s foreign exchange reserves.
China’s non-financial ODI slid 35.7 per cent in January to 53.27 billion yuan (US$7.77 billion) – the weakest in 16 months – compared with the same period a year earlier, the Ministry of Commerce said on Thursday.
Chinese investment in offshore property – which has helped fuel sharp and often contentious home price rises from Vancouver to London – fell by an even sharper 84.3 per cent.
Data earlier this month showed China’s foreign exchange reserves unexpectedly fell below the closely watched US$ 3 trillion level in January for the first time in nearly six years.
But the drop was less than expected, suggesting tighter regulatory controls are making some progress in slowing capital flight.
Following China’s moves to close loopholes on money leaving the country and step up checks on the types of overseas investment, ODI in December fell to US$8.41 billion, down 39.4 per cent on-year and the lowest monthly tally for 2016.
“Risk warnings from regulators and short- term controls have achieved results. Based on their own situation, domestic firms have been more orderly and rational in undertaking overseas direct investment,” China’s State Administration of Foreign Exchange (SAFE) said in a statement to Reuters last week. — Reuters