According to recent government data released on Wednesday, there was a significant rise in outbound direct investment (ODI) by Chinese firms in 2015.
The overall annual figure jumped by around 25 percent to over $24 billion. Regarding outstanding ODI, the figure was up to $170 billion by the end of the year representing a 35 percent rise compared to 2014.
The data came from the National Bureau of Statistics in conjunction with the Ministry of Commerce and the Administration of Foreign Exchange in Beijing. The report revealed that of the total ODI, around 85 percent was ploughed into financial institutions abroad, with the remainder going to firms involved in other industries.
“Some of the bigger Chinese insurance companies have made no secret of their huge overseas investments recently, Ping An Insurance Group Co and Anbang Insurance Group in particular,” said a spokesperson at CTI China Renaissance on the company’s blog. “Beijing has introduced incentives to encourage local firms to invest abroad, and the seeds of that policy are now starting to germinate.”
China is second only to the United States when it comes to overall ODI, with 10 percent of the global total. An official from the commerce ministry said that ODI is currently outpacing foreign investment into the country, making China a net exporter of capital. Foreign incoming capital (FDI) was around $140 billion last year.
The spokesperson also said that China has a “solid foundation for overseas investment due to its standing as the world biggest goods trader and its substantial reserves in foreign exchange currencies.
One downside of the trend will be the pressure created by the ODI on external payments and the vulnerability of the exchange reserves.
“We will be looking very carefully into possible risks that face the foreign exchange reserves as ODI increases and eclipses foreign investment into the country. Policy can be adjusted to compensate as and when necessary,” the official said.
