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April 19, 2017

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Outbound investment slumps in March

CHINA’S non-financial outbound direct investment slumped 30.1 percent in March from a year earlier as authorities kept tight scrutiny on cross-border capital flows.

Non-financial ODI totaled US$7.11 billion last month, Ministry of Commerce data showed yesterday.

For the first three months of this year, non-financial ODI tumbled 48.8 percent to US$20.54 billion from the same period of last year.

Outbound investment in countries involved in China’s Belt and Road initiative was US$2.95 billion in the first quarter, or 14.4 percent of the total, the ministry said.

Non-financial ODI tumbled 52.8 percent in the January-February period from the same period of last year, with amounts in the property and entertainment sectors down over 80 percent.

Dealmakers have said many Chinese companies are unable to close deals because they can’t get official permission to transfer yuan into foreign exchange.

Merger and acquisitions involving Asian companies fell 39 percent in the first quarter of 2017 to US$176 billion, the lowest level in nearly three years and highlighting a sharp pull back in overseas deals by Chinese firms, Thomson Reuters data showed. Banks’ advisory fees have taken a heavy hit as a result.

The ministry did not give the latest figures on China’s outbound property investment, but said funds mainly flowed to manufacturing, business services, software and information technology services, with manufacturing taking up 24.7 percent of the total.

China has boosted efforts to check cross-border capital flows since late last year as the yuan fell to over eight-year lows.

The yuan has steadied so far this year amid a retreat in the surging US dollar.

While Beijing says it supports legitimate overseas investment, regulators have warned they would pay close attention to “irrational” investment in property, entertainment, sports and other sectors.

Earlier data showed foreign direct investment into China rose 1 percent to 226.51 billion yuan (US$33 billion) in the first quarter from a year earlier.


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