China's 2019 FDI up 5.8 per cent, outbound investment slumps

Foreign direct investment (FDI) in China in 2019 grew the most in two years, though outbound investment declined amid continuing capital controls.

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FDI was up 5.8 per cent year-on-year to 941.5 billion yuan ($136.71 billion) last year, the commerce ministry said on Tuesday, the biggest rise since 2017 when it grew 7.9 per cent in yuan terms.

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China remained the second-largest recipient of FDI globally, said Chinese Vice Commerce Minister Qian Keming at a news briefing on Tuesday in Beijing.

China's outbound direct investment (ODI) declined 8.2 per cent to $110.6 billion in 2019, said Qian.

The structure of ODI is more "balanced" with most flows to rental and commercial services, manufacturing, distribution and retail, he said.

China's non-financial ODI rose just 0.3 per cent in 2018 having dropped sharply in 2017 as authorities kept a tight grip on outflows for what they termed "irrational" overseas projects.

Qian said $15 billion of investment accounting for 13.6 per cent of the total flowed to countries that are along the Belt and Road, China's ambitious plan to build a modern version of the Silk Road to link China with Asia, Europe and beyond through large-scale infrastructure projects.

Investment by Chinese firms was once a significant driver of global asset prices from property to mergers and acquisitions. But it has fallen sharply since Beijing tightened capital controls in 2016.

In yuan terms, China's total ODI declined 6 per cent to 807.95 billion yuan in 2019.