China's outbound investment slumps 46% as company spree curbed

[BEIJING] China's outbound investment slumped in the first half of the year as policy makers imposed curbs on companies' foreign acquisitions following a record spending spree in 2016.

Outward direct investment dropped to US$48.19 billion in the six-month period, down 45.8 per cent from a year ago, the Ministry of Commerce said Thursday. Spending fell 11.3 per cent to US$13.6 billion in June alone, the data show. Foreign direct investment fell 0.1 per cent in yuan terms in the first half, to 441.5 billion yuan, according to the ministry.

A surge in overseas purchases last year saw firms snap up everything from soccer teams to property. Authorities have been tightening capital controls to help stabilise the currency, and bank regulators last month probed exposures to companies including Anbang Insurance Group Co and HNA Group Co.

The first-half plunge on outbound spending was mainly due to a high comparison base, continued improvement in China's economy, rising uncertainties abroad and efforts to curb irrational investment, according to ministry spokesman Gao Feng. Real estate, hotel, cinema, entertainment and sports club investments saw substantial declines, he said.

"In the first half, our economy continued its stable performance with sound growth momentum, boosting investor confidence in leaving more funds at home," Mr Gao said.

Meanwhile, China's investment in nations along the Belt and Road path, a sweeping economic plan proposed by Chinese President Xi Jinping to boost regional trade, totaled US$6.6 billion in the first half of this year, according to Gao. That made up 13.7 per cent of total outbound investment, or a 6 percentage point gain from a year ago, he said.

BLOOMBERG