China’s Outward FDI in 2016 Likely to Exceed US$170 Billion

China’s outward FDI in 2016 is likely to exceed USD170 billion for the whole year and reach another historical record high, according to EY which released the 4th issue of its China outbound investment report.

In the coming years, the tide of China’s overseas investment should continue to rise and maintain a double-digit growth rate. The report also predicts that Chinese telecommunications enterprises will have great potential for development in the developing countries along the Belt and Road.

Aviation manufacturing is likely to become another business card in China’s high-end manufacturing industry “going out” process, following the successes of high-speed rail and nuclear power.

The report also emphasizes that Hong Kong has unique advantages in systems design, its reserve of professional talents and international experience, which position Hong Kong as a bridge between mainland China and other countries.

Hong Kong role important

As a consequence, Hong Kong will play an important role in connecting mainland China and the countries along the Belt and Road in the future.

In the meantime, Hong Kong could leverage the opportunities arising from the “One Belt, One Road” initiative to develop and upgrade existing competitive industries to refresh Hong Kong’s economy and achieve a win-win situation.

“Stepping into 2016, Chinese enterprises are performing remarkably well in the global investment market,” says Loletta Chow, Global Leader of EY’s China Overseas Investment Network (COIN). “As a net capital exporter, China’s outward investment has exceeded inward investment.”

Underlying the high growth is the fresh and energetic momentum released by the Chinese outbound investments.

“The significant increase in 2016 was not only driven by the implementation of the ‘going out’ strategies and the accelerated internationalization of Chinese enterprises, but also by the demand for overseas assets, especially dollar assets, under the depreciation pressure of renminbi,” adds Chow.

Official data shows that, China’s non-financial outward FDI reached US$118 billion in the first eight months of 2016, an increase of 53.3% year-on-year.

During 2011 to 2015, the CAGR of China’s outward FDI reached 16.9%.1 The EY report predicts that in 2016 China’s outward FDI is likely to achieve another historical record high - exceeding US$170 billion for the whole year.

“Chinese enterprises have begun to rapidly increase their global investment to achieve mid-to-long term growth. With the ‘One Belt, One Road’ initiative and other strategies serving as a powerful engine, more Chinese enterprises are expected to invest overseas and, therefore, a double-digit growth rate in China’s outward FDI is expected in the next few years,” Chow said.



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