China Feb overseas investment jumps on Dutch deal


BEIJING: China’s overseas direct investment (ODI) surged in February as a state-owned oil company put nearly $3 billion into a Dutch transaction, official data showed on Tuesday, while inbound investment slowed.

ODI jumped 68.2 percent year-on-year to $7.25 billion, the commerce ministry said, while for the first two months of the year it rose 51 percent to $17.4 billion.

Foreign direct investment (FDI) into China, meanwhile, rose 0.9 percent year-on-year to $8.56 billion in February, the ministry said. That marked a sharp slowdown from January’s 29.4 percent gain.
Both ODI and FDI exclude financial sectors.

China drew a total of $119.6 billion of FDI in 2014, while ODI surged to $102.9 billion, passing the $100 billion mark for the first time as Chinese companies look for opportunities abroad while economic growth at home slows.

The surge in February’s ODI was driven by a tenfold increase in investment in the European Union to $3.36 billion, largely due to oil company PetroChina pumping $2.89 billion into the Netherlands, said ministry spokesman Shen Danyang.

He gave no details of the transaction, which was not highlighted on China National Petroleum Corporation’s website or in filings to the Hong Kong stock exchange by its listed subsidiary PetroChina.

Investment in the United States soared by 64.8 percent in the first two months of the year from the same period in 2014, Shen said.

China has been actively acquiring foreign assets, particularly energy and resources, to power its economy, with firms encouraged to make overseas acquisitions to gain market access and international experience.

Shen said the euro’s depreciation against the dollar and China’s yuan currency may encourage more Chinese firms to buy up European assets.

“The continued slumps in the euro’s value against the dollar has led the price of eurozone assets to fall, creating an opportunity for Chinese companies to invest and carry out mergers and acquisitions there,” he told reporters.

But the government will “have to keep a close eye” on the trend as “price is just one of the considerations” when investing, he added.

Rising costs
The world’s second-largest economy expanded 7.4 percent last year, the slowest since 1990, as authorities try to transform the growth model to one in which consumer spending takes over as the key engine.

China’s appeal as an investment destination has also been declining in recent years owing to rising labor and land costs and competition from Southeast Asian countries such as Vietnam.

Officials have also blamed source country factors, such as Washington’s drive to move industrial production back to the United States.

Chinese authorities have mounted probes into alleged monopolistic practices, pricing and other activities by foreign firms in sectors ranging from auto manufacturing and pharmaceuticals to baby milk, but the commerce ministry has repeatedly denied that Beijing is targeting overseas companies.

In the January-February period, FDI declined 15.9 percent from Japan, with which China is in bitter dispute over territory and wartime history.

From the United States it fell by 31.8 percent year-on-year, which Shen attributed to the upturn in the world’s largest economy.

Investment from Saudi Arabia surged nearly tenfold and that from France and Germany rose by 366.7 percent and 59 percent respectively.

Shen said the increase was led by cash injections by individual companies in new or existing projects in China, including German auto giant Daimler, French chemical firm Arkema and Saudi Basic Industries Corp.



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