China records persistent growth in FDIs

Despite China’s economy being hit by a GDP (gross domestic product) slowdown and a volatile capital market, the country’s outward foreign direct investment (FDI) has managed to maintain persistent growth for 13 consecutive years.

Its outbound investment figures reached a record high at US$145.7 billion in 2015, partly due to an active overseas merger and acquisition (M&A) scene.  

According to the 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment jointly released by the National Bureau of Statistics, the Ministry of Commerce (MOFCOM), and the State Administration of Foreign Exchange, China’s outward FDI accounted for 9.9% of global market shares, an increase of 18.3% year-on-year (y-o-y).

The result saw China surpassing Japan ($128.6 billion) as the world’s second-largest economy in outbound investment after the US ($299.9 billion). 

Zhang Xiangchen, deputy China international representative of MOFCOM, comments that in 2015, global trade and industrial production remained in the doldrums with the continuing decline in commodity prices, whereas China went against unfavourable trends to gain a 9.9% global market share in outward FDI, up from 0.4% in 2002.

The report elaborates that as of end-2015, a total of 20,200 Mainland entities – spread across 188 countries – had been established abroad, with a total valuation of $4 trillion.

Last year, Mainland enterprises pursued 579 overseas M&As in 62 countries, with an aggregated transaction value of $54.4 billion. Of these, about 68.5%, or $37.28 billion, were FDIs. The overseas M&As covered 18 industries including mining, software and manufacturing.

In addition, with the development of the “One Belt, One Road” (OBOR) initiative, about 13%, or $18.9 billion, of total FDIs were diverted into OBOR countries, an increase of 38.6% y-o-y.

The OBOR initiative, which was first unveiled by China’s President Xi Jinping in 2013, focuses on connectivity and cooperation between Europe and Asia. The project consists of two components: the land-based “Silk Road Economic Belt”, and the ocean-based “Maritime Silk Road”.

 

Source Asia Asset Management

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