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China's outbound investment rises in Q1

China's outbound investment rises in Q1

Updated: 2012-04-17 20:57

By Ding Qingfen (

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Chinese outbound direct investments into the non-financial sector almost doubled in the first quarter from a year earlier as Chinese companies were encouraged to invest abroad and opportunities arose from the European debt troubles and the global financial crisis.

The fast pace of growth will continue in the coming months of the year, although it may not be as quick as what was seen in the first quarter, said Shen Danyang, spokesman for the Ministry of Commerce.

Shen said many developed and developing nations are searching the world for capital that can be used to spur their economies and, as a result, are welcoming investments from China.

At the same time, policy restrictions introduced by the Chinese government in 2011 will make State-owned enterprises more cautious about investing abroad this year, Shen said.

China’s outbound investment into the non-financial sector increased by 94.5 percent in the first quarter from a year earlier, rising to $16.55 billion, the ministry said on Tuesday in a press briefing, without disclosing figures for particular regions.

Of all Chinese outbound direct investment in the first quarter of 2012, about 40 percent, worth about $6.2 billion, went into mergers and acquisitions.

“China’s outbound direct investment may continue to increase rapidly this year,” Shen said. “But we probably cannot expect to see growth that is as high as 100 percent, as we saw in the first quarter, be sustained.”

China makes the fifth largest amount of outbound direct investments of any countries in the world. By the end of March, its accumulated outbound direct investments into the non-financial sector had totaled $338.5 billion. Last year saw such investments increase by 1.8 percent year-on-year to reach $60 billion.

Although Europe has expressed a commitment to dealing with its debt troubles, the world economy is still contending with great difficulties. Meanwhile, the United States, Japan, the European Union and other developed countries and regions “are still in trouble, and are not very willing to invest abroad”, Shen said.

At the same time, developed and developing countries are welcoming Chinese investments.

During a recent visit to China, Italian Prime Minister Mario Monti expressed gratitude for Chinese investments. He said he expects the influx of money will spur economic growth in his country, which is perhaps being stymied by recently adopted austerity measures.

Besides Italy, the leaders of other European nations, including Germany and France, have said they will welcome more investments from China.

In January, Sany Heavy Industry Co Ltd announced plans to pay 324 million euros ($426 million) for 90 percent of Putzmeister, the largest maker of concrete pumps in Germany.

“Chinese companies are more motivated to invest abroad, while their profits are getting thinner and thinner amid rising labor and operational costs in the local market,” Shen said.

China’s 12th Five-Year Plan (2011-15) calls for the country to encourage Chinese companies to invest overseas, as well as for foreign companies to invest in China.

China has been a target of trade protectionism for years and has become even more so recently, Shen said. That has driven Chinese companies to try to avoid trade disputes by investing and opening factories abroad.

In 2011, 69 trade remedy cases were filed in response to complaints about Chinese exports, which were valued at $5.9 billion. Various trade barriers, some of them having to do with product safety and environment protection, were also aimed at Chinese goods.

China has established various funds to help its companies invest in regions elsewhere in the world. They include the China-Africa Development Fund and the China-ASEAN fund. State-owned banks have provided them with some of their capital.

And reports have said that a fund will be established to help Chinese companies invest in Latin America. That is to begin operating this year.

By the end of March, 809,000 Chinese were working overseas under contracts, up by 40,000 from the same period last year.

Xinhua contributed to this story.

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