Wed, Apr 19, 2017 - Page 11 News List

Nonfinancial ODI dives 30%: China

Reuters, BEIJING

China’s nonfinancial outbound direct investment (ODI) last month slumped 30.1 percent from a year earlier as authorities kept a tight grip on capital outflows to help support the yuan and safeguard the country’s foreign exchange reserves.

Nonfinancial ODI last month totaled US$7.11 billion, Chinese Ministry of Commerce data showed yesterday.

In the first three months of this year, nonfinancial ODI tumbled 48.8 percent to US$20.54 billion from the same period last year.

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

Nonfinancial ODI tumbled 52.8 percent in January-February from the same period last year, with amounts in the property and entertainment sectors down more than 80 percent.

Dealmakers have said many Chinese firms are unable to close deals, because they cannot secure official permission to transfer yuan into foreign currencies.

Mergers and acquisitions involving Asian companies fell 39 percent in the first quarter this year to US$176 billion, the lowest level in nearly three years, highlighting a sharp pullback 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 accounting for 24.7 percent of the total.

China late last year tightened its grip on moving funds out of the country as the yuan plumbed more than eight-year lows. The currency has steadied so far this year, thanks to the capital curbs and a retreat in the surging US dollar.

While Beijing has said 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$32.9 billion at the current exchange rate) in the first quarter from a year earlier.

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