Country’s overseas investment almost doubled year-on-year to $9.79b in September

AFP

October 16, 2014

Beijing: Chinas overseas investment almost doubled year-on-year to $9.79 billion (Dh35.9 billion) in September, the government said Thursday, again exceeding incoming funds even though they recovered from multi-year lows.

Foreign direct investment (FDI) which excludes financial sectors into China came in at $9.01 billion for the month, the commerce ministry said, up only 1.9 per cent year-on-year but a significant improvement on Augusts $7.20 billion, which was the lowest since July 2010.

China has been actively acquiring foreign assets, particularly energy and resources, to power the worlds second-largest economy, with firms encouraged to go out and make overseas acquisitions to gain market access and international experience.

Overseas direct investment (ODI) was up 90.5 per cent in September, and officials have said it could exceed FDI this year.

For the first nine months total ODI stood at $74.96 billion, up 21.6 per cent, with FDI at $87.36 billion, down 1.4 per cent.

Over the period, Chinese investment into the European Union soared 218 per cent to $9.0 billion, the ministry said.

For Japan it leaped 150 per cent into Japan, while also going up 69.7 per cent into Russia and 19.5 per cent into Hong Kong, the ministry added, without giving totals.

It was up 28.2 per cent to $3.95 billion into the US.

Ministry spokesman Shen Danyang attributed the rapid growth in ODI to strong market forces Chinas need to invest abroad and demand from destination countries along with policy support from Beijing and foreign governments.

We believe Chinas overseas investment and cooperation will maintain a fast development momentum in the future, he said.

In the first nine months FDI fell 43.0 per cent from Japan to $3.39 billion, 24.7 per cent from the US to $2.17 billion, 18.8 per cent from the European Union to $4.84 billion, and 13.7 per cent from the Asean group of southeast Asian countries to $4.90 billion.

But it rose 32.5 per cent from South Korea to $3.23 billion and 32.3 per cent from Britain to $1.01 billion.

Rising competition

Chinese authorities in recent months launched anti-monopoly, pricing and other inquiries into foreign firms in sectors ranging from auto manufacturing and pharmaceuticals to baby milk.

The probes have raised concerns among investors that Beijing is targeting overseas companies, accusations the commerce ministry has repeatedly denied.

We have always been confident in Chinas [appeal] to foreign investment, Shen said. Most multi-national companies and foreign invested firms in China are also confident in the countrys investment environment.

But Chinas appeal as an investment destination has declined in recent years in the face of rising labour and land costs and competition from other Southeast Asian countries such as Vietnam.

Chinese officials have also blamed source country factors, such as Washingtons drive to move industrial production back to the US.

Some developed countries in recent years speeded up the return of some manufacturing sectors to boost their own economy and create jobs, Customs spokesman Zheng Yuesheng told reporters this week. This has led investment in Chinas relevant industries to cool.

Concerns are mounting about Chinas economy, after industrial production growth slowed sharply in August to its lowest level for more than five years, while house prices have fallen for five consecutive months.

Inflation in the country also fell to its lowest in almost five years last month, raising fears that deflationary pressures are rising.

The economy grew 7.7 per cent last year, maintaining its slowest pace in more than a decade.

Officials are targeting economic growth of about 7.5 per cent this year, the same as last years objective.

The goal is normally exceeded, but senior officials have repeatedly sought to play down its significance this year.

Chinas third-quarter gross domestic product figures are due next week.

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