China’s investments into US fell 35pc in 2017 due to outflow curbs and tighter screening of deals
Two-thirds of the cancelled deals worth $12 billion in North America and Europe were caused by foreign regulatory intervention, study shows
Foreign direct investment (FDI) from China into the US tumbled 35 per cent in 2017 to US$30 billion because of Beijing’s curbs on capital outflows, tougher deal scrutiny by US authorities and rising trade tension between the world’s biggest two economies, according to a joint study by law firm Baker McKenzie and consultants Rhodium Group.
The research tracked combined value of direct investment transactions by Chinese mainland companies, including greenfield projects and acquisitions that result in 10 per cent or above equity control.
The fall in FDI is consistent with China’s official data, which shows that its global FDI flows declined by a third in 2017 – the first drop since 2006, according to the joint report issued on Wednesday.
Han Yong, a senior official at the Ministry of Commerce, said on Tuesday that Chinese companies invested a combined US$129 billion into 6,236 offshore companies in 2017, a decline of 29.4 per cent year on year as “irrational investment was effectively curbed”.
The Chinese government had imposed additional restrictions on outbound investment to address balance of payment concerns and mitigate perceived risks for China’s financial system arising from rapid overseas investment.