Outbound investment slows

China's non-financial outbound direct investment totaled US$60 billion last year, the Ministry of Commerce (MOFCOM) said Wednesday, a rise of 1.8 percent year-on-year but far lower than the 36.3 percent growth in 2010.

In 2011, China invested in 3,391 companies in 132 countries and regions, and total non-financial outbound investment reached US$322 billion so far, said MOFCOM.

Shen Danyang, a spokesman for the ministry, said that the slowdown in the recovery of the world economy has been a major factor behind the decline.

"Companies now tend to be more cautious when it comes to investment decisions and cross-border investment has shown signs of decline throughout the world," Shen told reporters at a news conference yesterday in Beijing.

Shen also mentioned that political unrest in the Middle East and North Africa had been a restraining factor for China's outbound direct investment.

Despite the gloomy overall picture, China's investment in Europe and Africa saw a significant rise last year, said MOFCOM.

Chinese investment in the European Union reached US$4.28 billion last year, up 94.1 percent year-on-year, and investment in Africa topped US$1.7 billion, up 58.9 percent compared with 2010.

"Investment costs in Europe are lower at present, given the sluggish European economy," He Weiwen, co-director of the Study Center for China-US/EU under the China Association of International Trade, told the Global Times Wednesday.

He noted that Europe is more advanced than the US in sectors such as manufacturing, logistics and retailing, which are also the main focus of Chinese companies seeking overseas expansion.

Shen said investment in Europe is set to grow further in the coming year.

"The investment environment is very welcoming in Europe … and European countries do not have the tendency to politicize economic issues, unlike the US," Shen noted.

MOFCOM said that despite the trade frictions between China and the US last year, the US is still one of the top investment destinations for Chinese companies.

Outbound direct investment in terms of mergers and acquisitions, which focus on sectors like mining, manufacturing, power generation and retailing, amounted to US$22.2 billion in 2011, accounting for 37 percent of China's total outbound investment.

Inward investment also slowed in 2011. Foreign direct investment in China rose 9.72 percent to US$116 billion in 2011, far lower than the 17.4 percent growth in 2010.