China Cross Border Investments: Tracking the Flow

　Energy and Transportation, the Largest sectors

Both sectors accounted for 36% and 19% of investments respectively over 2005-18. Energy investment has been driven by new hydro projects in Africa and South America and renewables projects in Asia. Investments to developed nations has subdued over 2015-18. Transportation projects was mainly triggered by the OBOR initiative driving investments at a CAGR of 36% over 2013-17.

　Technology Gains Traction

Its share of investments increased to 9% in 2016 (from 0.5% in 2008). It grew at an impressive CAGR of 60% over 2011-16 with investments focused on EU and the USA, targeting robotic & chip manufacturers, and distribution companies. However, investments over 2017-18 slowed owing to regulatory restrictions, especially in the USA.

　Europe Retains High Level of Interest

By region, Europe led investments from 2014 onwards (20% of total over 2005-2018). Sector interest has been diverse as opposed to that demonstrated in developing nations. Transportation, and Technology industries led investments in the region. Interestingly, of the transport sector investments in EU, Germany accounted for 25% of investments over 2005-18.

　USA and Australia on a Downtrend

Annual share of both declined recently with the USA coming in at 6% in 2018 (compared to a decade high of 30% in 2010) while Australia share was down to 3% in 2018 (decade high of 18% in 2008). Investments to the USA has been low over 2017-18 due to political and regulatory reasons while Australian investments has mainly declined owing to a halt in investments to the metals industry since 2016.

　Regulatory Pressures Lead to a Drastic Drop in Overall FDI in 2018

China’s overall FDI dropped by 36% YoY in 2018, following a historic peak in 2017. The decline was due to new domestic regulation on outbound FDIs, especially for private companies. In addition, foreign regulatory pressures on Chinese investments and a faltering trade relationship with the USA may have impacted 2018 further.

　State Backed Chinese Entities Dominate

Across 2005-18, majority of the investments made in all sectors have been from state backed enterprises. Of the top 10 investing companies (roughly 30% of investment value over 2005-18), 8 were stated backed. Moreover, the top 4 investing companies in the energy and transportation sectors accounted for 40-50% of sector investments.

Report Index

• Snapshot
• Outbound FDI by Region
• Outbound FDI by Sector
• The 2018 Conundrum
• Deep Dive : Top Five Sectors
• One-off High Value Investments
• Appendix

　The full report is only available for SPEEDA subscribers.

　If you would like to find out more about this report and what SPEEDA is able to offer, please kindly reach us at sp-asia.mktgroup@uzabase.com

　If you are subscribed to SPEEDA, please click on the following link to access the full report.