By Tang Guhan
The United Nations Conference on Trade and Development (UNCTAD) recently released its annual World Investment Report for 2017, showing a decrease of 23 percent for global flows of foreign direct investments (FDI).
The decline was in stark contrast to other macroeconomic indicators such as the GDP and trade, which saw substantial improvements in 2017.
The report said the global FDI flows fell by 23 percent to $1.43 trillion in 2017, which was the lowest in the past three years. It was predicted that the figure would increase by 5 percent to $1.5 trillion in 2018.
The inward FDI flows to developed economies fell sharply, by 37 percent, to $712 billion while the inward FDI flows to developing economies remained stable at $671 billion. The United States remains at the top among nations who garnered the most FDI in 2017, with a figure of $275 billion.
“With reported inflows reaching an all-time high, China continued to be the largest FDI recipient among developing countries and the second largest in the world, behind the United States.”
The inward FDI flows to China surged by 1.5 percent to $136 billion while the outward FDI reduced by 36 percent to $125 billion, which was the first time it had decreased since 2003.
“The decline of investments from Chinese multinational enterprises (MNEs) was the result of government policies for clamping down on outward FDIs, in reaction to significant capital outflows during 2015-2016, mainly in industries such as real estate, hotels, cinemas, entertainment and sports clubs.”
Projections indicate “inflows to China could see continued growth as a result of recently announced liberalization plans.”
Chinese banks had seen significant outward foreign investments in 2017. The Ping An Insurance Group, China’s largest insurance company, became the second largest stakeholder of HSBC Holdings in the last quarter of 2017. Moreover, the three Chinese State-owned banks have expanded overseas rapidly, namely the Industrial and Commercial Bank of China (ICBC), the Bank of China and the China Construction Bank.
