Chinese companies are “increasingly eyeing opportunities outside of the country”, with Africa becoming a favoured destination rather than other locations in Asia, the South China Morning Post has reported.
According to the SCMP, the latest Ministry of Commerce figures, published yesterday, revealed that China’s non-financial outbound direct investment (ODI) had surged by 53.7% year on year to Y882.78, between January of this year and September.
“Last month alone, ODI rose 56.9% year on year, to US$16.16bn,” the Hong Kong-based, English-language publication noted.
It said that the increase in investing overseas was being driven by a combination of soaring costs of doing business in China, and the depreciating value of the yuan.
The SCMP noted that China’s Xinhua news agency had reported that “at least 100 mainland based textile companies…had invested in or set up 2,600 overseas companies globally by the end of 2014, in an effort to cut costs and avoid toughening trading barriers”. While most of these had been in Asia, growing interest had been seen in setting up shop in Africa as well, or instead.
The SCMP quoted statistics from the Financial Times‘s fDi Markets data service that showed “a dramatic 515% increase in 2016 from 2015 figures” in China-sourced capital expenditure into Africa, with five months of data still to come. The total amount spent during this time was US$14bn.
The SCMP went on to cite the example of TAL Group chief executive Roger Lee, who told the publication that his textile and garment-manufacturing company was planning to shutter one of its textile plants in southeast China by the end of the year, even as it was setting up a a new manufacturing site in Hawassa, Ethiopia.
To read the article in the SCMP, click here.
News of the surge in ODI in China came a day ahead of the release of the latest quarterly economic data on the Chinese economy, which showed that it expanded at an annual rate of 6.7% in the three months to the end of September, consistent with the previous two quarters. The news was greeted with caution by experts, who said it was in line with official expectations, but that concerns over high levels of corporate borrowing and over-heated Chinese property markets remained.
To see the official government statement on the data, on the website of the National Bureau of Statistics of China, click here.