China’s foreign investment plunges after official curbs

BEIJING (AP) — China’s investment in other countries has plunged since Beijing tightened controls to cool surging spending on British soccer teams, Manhattan real estate and other assets deemed unneeded for Chinese economic development.

Outward investment in the first eight months of this year fell 41.8 percent from a year earlier to $68.7 billion, the Commerce Ministry said Thursday.

Chinese companies, flush with cash from an economic boom, ramped up purchases of foreign technology and brands in recent years to speed their development. But after a flood of money into sports and entertainment, authorities tightened controls on the flow of capital out of the country last year and said they want investment to focus on technology and other assets needed by China’s economy.

China’s investment abroad is relatively small compared with that of developed countries, but the surge in spending and Chinese buyers’ willingness to pay top prices for premium assets has made them sought after by sellers abroad.

Chinese money plays an outsize role in smaller economies such as in Eastern Europe. Chinese investors also have bought high-profile assets such as New York City’s Waldorf Astoria Hotel and the Hollywood studio Legendary Entertainment.

Investment this year went mainly into manufacturing, wholesale and retail, and information technology, according to the Commerce Ministry. It said there were no new investment projects abroad in sports, entertainment or real estate.

“Irrational outbound investment was further contained,” a ministry spokesman, Gao Feng, said in a statement on its website.

Chinese buyers also might face more hurdles abroad after the president of the European Commission, Jean-Claude Juncker, said Wednesday he will propose a European system to screen incoming foreign investment.

Juncker didn’t mention China but the announcement follows mounting complaints that Chinese buyers are free to make almost any acquisition in Europe while Beijing bars sales of most assets to foreigners.

European sensitivity has been especially high since last year’s purchase of Germany’s Kuka, a leading industrial robot maker, by China’s Midea Group.

Chinese buyers see Europe as more welcoming to investment than the United States, where some deals are required to undergo a security screening.