China foreign expenditure tops inward investment | 2016-09-23 | daily-sun.com

China foreign expenditure tops inward investment

23 September, 2016 12:00 AM printer

BEIJING: China invested more money abroad last year than foreign firms piled into the country, data showed Thursday, a first for the world’s second largest economy as Beijing looks overseas as part of its drive to transform its economic growth model.
Overseas direct investment soared more than 18 percent to an all-time high above $145 billion last year, exceeding the $135.6 billion of foreign direct investment, reports AFP.
This “historic breakthrough” was a result of the “enhancement of China’s comprehensive national power”, deepening cooperation, and Beijing’s strategy of encouraging Chinese firms to “go abroad” in search of growth, the government said.
Chinese firms “have to make use of international resources and markets to transform and upgrade”, the commerce ministry’s representative Zhang Xiangchen told reporters at a news conference. “We feel companies currently are keen to go abroad and actively integrate into global innovation, manufacturing and market networks.”
The data was revealed in the 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment.
China’s economy grew at its slowest pace in a quarter of a century last year, and continues to decelerated as the country faces multiple development bottlenecks. Among these are manufacturing overcapacity, insufficient domestic demand and increasing energy and resources consumption.
To enhance their competitiveness, cash-flush Chinese firms have sought to acquire foreign brands, technologies and resources.
Last year Chinese firms conducted $54.4 billion of mergers and acquisitions, including the takeover of Italian tyremaker Pirelli by state-owned ChemChina. And 2016 has seen an even greater flurry of activity.
In the first eight months of this year, M&A surged to $61.7 billion, the ministry said, as Chinese companies scored massive investments, from Hollywood studio Legendary to leading German robotics firm Kuka and Swiss seed giant Syngenta.
 “We think Chinese companies’ overseas takeovers can help them acquire high-end production elements such as design, research and development, marketing and service to upgrade their positions in the global value, industrial, logistics chains,” said Zhang, adding that they can also contribute to the economies of host countries.
But problems remain for these firms as they pursue overseas expansion, he said. “Some companies went with overseas takeovers blindly.
We found some firms did not make sufficient research into basics such as the purpose and necessity of overseas M&As. Some... rushed to expand while some were driven by irrational reasons to simply follow the craze or show off.”


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