Charts of the Day: China Tops Global Outbound Investment Table for First Time

China topped the global league table for outbound direct investment (ODI) for the first time last year, a new government report showed, as a 12.3% jump in spending bucked a slump in the rest of the world amid the Covid-19 pandemic.

ODI by Chinese mainland companies rose to $153.7 billion in 2020, the first annual increase in four years, according to a report (link in Chinese) released by the Ministry of Commerce Wednesday. That’s still well below the record $196.1 billion (link in Chinese) achieved in 2016, which put China in second place, behind the U.S. with $299 billion, ministry data show.

The recovery in investment outflows came as China further promoted the Going Out policy that encourages good domestic enterprises with a strong reputation to expand their businesses overseas, the ministry said in its 2020 Statistical Bulletin of China’s Outward Foreign Direct Investment.

Total ODI by countries worldwide fell 39.4% last year to $739.9 billion, while investment from developed economies fell 55.5% to $347.2 billion, as the Covid-19 pandemic restricted global economic activity, the report said, citing data from the United Nations Conference on Trade and Development. The decline boosted China’s share of total ODI to 20.2%, up from 10.4% in 2019 (link in Chinese) and 13.5% in 2016 when the country’s outbound investment was at its peak.

At the end of last year, the stock of China’s ODI rose to $2.6 trillion, retaining its spot as the third-highest, following the U.S. and the Netherlands, the report showed.

The growth in ODI from the mainland last year came as the government started to ease restrictions on capital outflows to counter a surge in inflows from the opening-up of domestic financial markets that was putting upward pressure on the yuan.

Last year, outward investment in leasing and business services accounted for about 25% of China’s total ODI, ranking first by sector, the report showed. It was followed by the manufacturing sector with a 16.8% share and the wholesale and retail sector, which took up 15%.

Chinese firms also continued to invest heavily in some of the 63 countries involved in the Belt and Road Initiative, with spending rising 20.6% to $22.5 billion. The investment contributed 17.7% of China’s total ODI last year.

Asia still accounted for the bulk of China’s ODI last year at $112.3 billion, 73.1% of the total, although the rate of growth was just 1.4%, the ministry’s report showed. But investment in Latin America surged 161% to $16.7 billion last year, while Africa jumped 56.1% to $4.2 billion and North America rose by 45.1% year to $6.3 billion.

Contact reporter Tang Ziyi (ziyitang@caixin.com) and editor Nerys Avery (nerysavery@caixin.com)

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