China’s non-financial outbound direct investment (ODI) nearly halved in the first half of the year as curbs over capital outflows took effect, the Chinese Ministry of Commerce said yesterday.
Outbound direct investment in the January to June period plummeted 45.8 percent from a year earlier to US$48.19 billion.
Rapid falls in the yuan prompted Beijing to tighten control over funds moving out of China since late last year, as it moved swiftly to quash expectations of a further steep depreciation and safeguard its reserves.
Capital outflows have eased in recent months in the face of tighter regulations and the US dollar’s rally paused. The yuan has gained more than 2 percent this year.
“Unreasonable outbound investment have been effectively curbed,” the ministry said at a regular news conference in Beijing, adding that overseas investment in real estate, hotels, cinemas and entertainment have all dropped significantly.
For example, investment into overseas real estate fell 82.1 percent from a year earlier in the first six months of the year, accounting for just 2 percent of the total outbound investment during the period, ministry data showed.
Last month alone, China’s total outbound investment dropped 11.3 percent from a year earlier to US$13.6 billion.
China burned through nearly US$320 billion of reserves last year, but the yuan still fell about 6.5 percent against the US dollar, its biggest annual drop since 1994.
The ministry also cited a recovery in the domestic economy and rising instability in the global trade environment as reasons for the sharp decline of China’s investment abroad.
“Some countries have tightened market access for foreign capital,” it said, without naming the specific controls.
Foreign direct investment (FDI) into China fell 0.1 percent to 441.54 billion yuan (US$65.1 billion) in the first half from the same period a year earlier, the ministry said.
Last month alone, FDI rose 2.3 percent from a year earlier to 100.45 billion yuan.
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