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China ODI surges in 2014

January 16, 2015

Chinese companies continued their buying spree abroad last year, for the first time acquiring overseas assets worth more than $100 billion in 2014. Foreign direct investment into China rose less significantly.

China welcome sign
Image: Fotolia/philipus

China's Vice Commerce Minister Zhong Shan said Friday that the country's overseas direct investment (ODI) had risen 14.1 percent to $102.9 billion (88.4 billion euros) in 2014, with interests in energy and resources attracting the biggest funding.

In the same period, foreign direct investment (FDI) into China increased 1.7 percent to $119.6 billion, he said, which was the second consecutive increase, but a marked deceleration compared with the previous year. Both ODI and FDI exclude financial sectors.

"On current trends, China's outward investment will continue to grow faster than its utilization of foreign investment, which will make China a net investor in no time, making a historic turning point," he said.

The ministry did not provide complete country and regional breakdowns for Chinese investment destinations in 2014. But it noted that investment in the European Union nearly tripled while that to the United States increased 23.9 percent.

Investment obstacles

Observers attribute the slowdown in FDI growth to China's anti-monopoly, pricing and other inquiries into foreign firms in sectors from auto manufacturing and pharmaceuticals to baby milk. This had fueled fears Beijing was targeting them.

Moreover, the Asian powerhouse's appeal as an investment destination has suffered in recent years due to increasing land and labor costs, and competition for investment from other Southeast Asian countries such as Vietnam.

As a result, investment from the 28-member EU fell 5.3 percent to $6.85 billion in 2014, while investment from the 10-member ASEAN group of Southeast Asian nations declined 23.8 percent to $6.51 billion. Investment from the United States also declined 20.6 percent to $2.66 billion.

FDI increases were reported from South Korea, up 29.8 percent to $3.97 billion, and Britain, rising 28 percent to $1.35 billion. No figures were given for Hong Kong and Taiwan, which used to be the biggest inbound investors in the past. For December alone, inward investment increased 10.3 percent to $13.3 billion, according to the ministry.

uhe/sgb (Reuters, AFP)