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China Economy

China’s March outbound direct investment slumps 30.1pc to US$7.11b

Curbs on capital outflow weigh down overseas investment

PUBLISHED : Tuesday, 18 April, 2017, 2:01pm
UPDATED : Tuesday, 18 April, 2017, 10:43pm

China’s non-financial outbound direct investment (ODI) slumped 30.1 per cent in March from a year earlier as authorities kept a tight grip on capital outflows to help support the yuan and safeguard the country’s foreign exchange reserves.

Non-financial ODI totalled US$7.11 billion last month, Commerce Ministry data showed on Tuesday.

For the first three months of this year, non-financial ODI tumbled 48.8 per cent to US$20.54 billion from the same period last year.

Outbound investment in countries involved in China’s “One Belt, One Road” infrastructure initiative was US$2.95 billion in the first quarter, or 14.4 per cent of the total, the ministry said.

Non-financial ODI tumbled 52.8 per cent in January-February from the same period last year, with amounts in the property and entertainment sectors down more than 80 per cent.

China’s outbound real estate investment to fall on forex curbs

Dealmakers have said many Chinese firms are unable to close deals because they cannot secure official permission to transfer yuan into foreign exchange.

The ministry did not give the latest figures on outbound property investment, but said funds mainly flowed to manufacturing, business services, software and information technology services, with manufacturing accounting for 24.7 per cent of the total.

China tightened its grip on moving funds out of the country late last year as the yuan plumbed more than eight-year lows. The currency has steadied so far this year, thanks to capital curbs and a retreat in the surging US dollar.

While Beijing says it supports legitimate overseas investment, regulators have warned they would pay close attention to “irrational” investments in property, entertainment, sports and other sectors.

Earlier data showed foreign direct investment into China rose 1 per cent to 226.51 billion yuan (US$32.91 billion) in the first quarter from a year earlier.