China has seen a hefty rise in foreign direct investment in the past 12 months, a fresh study has shown. Imbalances are growing as investments by foreign companies in China are lagging far behind for various reasons.Chinese outbound foreign direct investment (OFDI) surged to a record high in 2016 to reach nearly $200 billion (189.6 billion euros), a report by research firm Rhodium Group and the Mercator Institute for China Studies said Wednesday.
The survey showed clearly that the European Union continued to be the favorite destination for Chinese investors.
But the sheer volume of financial resources spent there means imbalances are growing further as Chinese market players invested four times as much on acquisitions in the EU last year as Europeans did in China.
No level playing field
The study estimated that Chinese direct investment in the EU grew by 76 percent to 35.1 billion euros in 2016 year on year, dwarfing the opposite flow of just 7.7 billion euros.
“The increase in Chinese OFDI was so dramatic in 2016 that China’s leadership is now stepping on brakes on the pace of capital outflows,” the study said.
The authors attributed some European companies’ hesitance to invest in China to slowing economic growth in the world’s second-largest economy as well as to hurdles for access to the country’s markets.
“The only way to ensure that the European business community and government leaders continue to welcome growing Chinese investment in Europe is to make real progress on reforms that increase the role of markets and level the playing field for foreign companies in China,” the study concluded.
hg/jd (Reuters, AFP)