China's record global buying spree wanes amid capital flow curbs

[BEIJING] China's record outbound investment slumped last month as authorities stepped up scrutiny of acquisitions overseas and other deals to keep money from flowing out of the country.

The world's biggest trading nation saw outward investment decline 35.7 per cent from a year earlier in yuan terms in January, the Ministry of Commerce said Thursday. Foreign direct investment to the nation also dropped by 9.2 per cent.

Overseas purchases surged to a record last year. Last month, the foreign exchange regulator rolled out measures to further examine such deals. The government has announced new rules aimed at keeping money in the country as officials seek to stem capital outflows and bolster the weakening yuan.

The fall in foreign direct investment also raises questions about the nation's appeal to investors. That decline was mainly due to a high base last year and the distortions caused by the week-long Lunar New Year holiday, when workplaces close and millions travel home.

"We saw some fluctuations in January data" on foreign investment, Sun Jiwen, a commerce ministry spokesman, said at a briefing in Beijing.

"But that doesn't represent a full-year trend for China's attraction of foreign investment."

BLOOMBERG