Fundraising in China: a review of China outbound investments in 2019 and outlook

China experienced an optimized structure and stable development in ODI flows despite the downward trend in 2019 due to adverse global investment conditions. China’s ODI flows have continued to rise in global rankings and in 2018, China became the world’s second largest outward investor after Japan, whereas the US was no longer within the top 20 outward investors. In H1 2019, China’s ODI reached US$57.4 billion, down 8.4% YoY, with non-financial ODI dominated by the leasing and business services, manufacturing, wholesale and retail and mining, information transmission, software and IT services sectors, representing 30.3%, 18%, 9.5%, 8.4% and 8.1%, respectively.

Although China’s ODI has declined for two consecutive years, greenfield investment is becoming increasingly favored among Chinese companies. And despite overall declining, certain industries are maintaining growth momentum, for instance, China’s ODI in manufacturing, information transmission, software and IT service sectors increased by 7.3% YoY and 31.7% YoY, respectively.

In terms of ODI stock, China ranked third globally after the US and the Netherlands in 2018, accounting for 6.3% of the total stock worldwide compared with 1.2% in 2008. Moreover, China’s ODI stock amounted to 30% and 80% of the US and the Netherlands, respectively, overtaking developed countries such as Japan, Germany and the UK.

Even though the global investment climate faces severe challenges in 2019, we do see that China’s ODI demonstrates resilience and possesses significant growth, and the Chinese companies will vigorously improve their investment quality going forward. Mr. Albert Ng, the Chairman of EY Greater China, believes that “although Chinese companies may occasionally face resistance while investing overseas, economic globalization is an irresistible trend and economic flow between countries will become more orderly and diversified”.