|Author (Person)||Hanemann, Thilo, Huotari, Mikko, Kratz, Agatha|
|Publisher||Mercator Institute for China Studies (MERICS), Rhodium Group|
|Series Title||Papers on China|
|Publication Date||March 2019|
|Content Type||Research Paper|
The story of China’s global outward foreign direct investment (OFDI) has entered a new chapter. Following a decade of rapid growth, China’s global investment declined sharply in 2017, after Beijing re-imposed administrative controls to tame 'irrational' capital outflows.
In 2018, China’s global investment fell further in most regions of the world, illustrating the fact that 2017 was not a temporary outlier. Official Chinese statistics show similar levels of outbound investment in 2018 and 2017, but other data sets point to a further decline of outbound investment of up to 50 percent (Figure 1). Moreover, Chinese companies sold tens of billions of dollars of overseas assets last year, reducing their international footprint.
The main reasons for this continued slump are still to be found at home: In 2018, Beijing maintained its tight grip on outbound capital flows; it pressured highly leveraged firms to sell off overseas assets; and it reduced liquidity in the financial system amidst a broader clean-up of the financial sector, thus drying out financing channels for overseas investments.
|Subject Categories||Business and Industry|
|Keywords||Foreign Direct Investment [FDI]
|Countries / Regions||China|
|International Organisations||European Union [EU]|