Singapore has passed the United States to emerge as the top destination for overseas investments from China, based on a new report out yesterday. It discovered that the US dipped into second spot with Hong Kong second, subsequently Malaysia and Australia. The report from The Economist Intelligence Unit (EIU) covered the auto, consumer goods, energy, financial services, telecommunications and healthcare industries. It noted: Malaysia and Singapore stand out as enticing BRI (Belt and Road Initiative) destinations, providing an expenditure environment that offers opportunities as well as low degrees of risk.
The EIU said efforts by Chinese firms to develop a world wide innovative in areas such as electric vehicles, financial technology and renewable energy are increasingly shaping overseas direct investment efforts.
Internet giants like Tencent and Alibaba were mentioned as organizations that are purchasing e-commerce startups around Asia. Since its last report from 2015, the EIU unearthed that developed markets remain the most alluring destinations for Chinese investments, however that growing markets have seen that the many notable benefits. Singapore was judged the second-most attractive destination for Chinese foreign investments at the 2015 account, as the US came out tops.
Australia was third then, while Hong Kong and Malaysia were in the seventh and 21st positions. The advancement in positions of countries like Malaysia, Kazakhstan, Thailand and Iran were also attributed to China's BRI, which has created additional incentives for Chinese businesses to invest in countries along the road. However, tensions in foreign and trade relations with China have caused a drop in the ranking of several major economies, including the US and India.
China's trade ministry said non-refundable overseas direct investment into BRI countries grew by 18.2 per cent to US$14.8 billion (S$20 billion) in 2015, however it dropped two percent to US$14.5 billion final year and it has "struggled" in 20 17. Chinese foreign direct investment to BRI countries fell by 13.7 percent in the nine months to September annually.
The prognosis for China's international direct investment appears to have dimmed. After a closed year for deal-making in 20-16, leaks from China increased by over 40 in the first ten months of 2017, the report said. Although noting that the steep fall in Chinese investment overseas this season amid stepped-up regulatory oversight, the report stated the drop is very likely to be temporary.
The drivers supporting such investment in late years - a desire to tap new markets and acquire brands and technology - remain. EIU China analyst Dan Wang said: "It remains a thrilling time to be watching the worldwide expansion of corporate China, but firms should really be discerning in regards to the regions, countries and businesses they choose to employ.