(Yicai Global) June 19 – China’s outbound investment plummeted in the first five months of this year, according to official data, showing policies brought in to tame “irrational” overseas investment are starting to take effect.
Chinese investors spent almost USD34.6 billion on non-financial direct investments in 3,121 foreign companies in 145 countries and regions during the period, 53 percent less than the same period last year, data from the nation’s Ministry of Commerce showed. Direct outbound investments in May totaled USD8.22 billion, 38.8 percent less than a year earlier.
Last year, China’s non-financial direct outbound investments jumped 44 percent to more than USD170 billion, making the nation the world’s second largest. However, the dramatic growth was partly driven by high-risk, large-scale corporate investments in side businesses, such as real estate, hotels, cinemas, entertainment and sport.
A number of state departments called for tightened regulation on overseas investment to monitor irrational investment, large-sum investments in non-core businesses, overseas investments by limited partnerships, “small parent companies with large subsidiaries” and new companies rushing to go global. Outbound investment has been declining for six months since a spike last year.
In the first five months of this year, outbound investment mostly went toward commercial services, manufacturing, construction and information transmission, software and information technology services, commerce ministry data shows. Investment rose 88.8 percent in construction and 45.8 percent in data transmission, software and information technology services.
Chinese building contractors in foreign countries saw turnover rise 0.6 percent to USD50.4 billion over the period, while the value of new contracts fell 0.1 percent to USD 75.4 billion. In May alone, turnover climbed 4.9 percent and new contracts surged 17.9 percent to nearly USD13.6 billion.
Through 2,128 projects in 61 countries along the One Belt, One Road route, China’s construction companies signed contracts worth USD38.47 billion during the first five months, making up 51 percent of the total value of foreign construction projects contracted to Chinese companies, 1.6 percent less than last year. Turnover from projects in Belt and Road countries hit USD24 billion, 47.6 percent of the total and 6.7 percent more than last year.