China posts first drop in ODI growth

BEIJING: China last year posted its first decline in non-financial outbound direct investment since it began publishing the data in 2003, as firms backed off from speculative overseas investment amid a government crackdown.

Non-financial outbound direct investment in 2017 fell 29.4% on the year to $120.08 billion, the Commerce Ministry said yesterday.

Outbound direct investment (ODI) in December alone rose 49% on the year to $12.53 billion, a Reuters calculation on official data showed, extending gains from November’s annual growth of 34.9%.

The positive ODI growth in the past two months has been fuelled largely by China’s increased investments in the manufacturing and information sectors, the ministry said, while no new Chinese investments went to the property, sports and entertainment industries.

“Irrational overseas investment has been effectively contained,’’ the Commerce Ministry added.

Overseas investment by Chinese firms has fallen sharply since Beijing in late 2016 levied strict controls on capital leaving the country.

China says it continues to encourage genuine overseas deals but has vowed to limit investment in overseas property, hotels, entertainment, sports clubs and film industries it suspects is more speculative and aimed at evading tight capital controls.

Investment in countries involved in China’s Belt and Road initiative, an extensive infrastructure plan meant to link Asia with the Middle East and Europe, totalled $14.36 billion in 2017, the Commerce Ministry said.

Belt and Road deals accounted for 12% of total investments in 2017, up 3.5 percentage points from a year earlier.

Foreign direct investment (FDI) into China in December fell 9.2% from a year earlier to 73.94 billion yuan ($11.49 billion), the first decline in five months.

For 2017, FDI rose 7.9% to 877.56 billion yuan.

“China faces relatively big external pressure in attracting FDI this year due to uncertainties in the global investment environment,’’ the Commerce Ministry said.