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China Becomes Number One in Outbound Greenfield FDI
2016-06-15
Brief:Mainland groups are turning to investment overseas as their economy slows.
China’s economic slowdown has sparked worries that its rapid rise as a source of foreign direct investment could also be slowed. Early signs this year are that the corporate sector in China remains bullish on overseas expansion and in particular is pursuing entirely new opportunities. 
 
According to fDi Markets, an FT data service, China has assumed, for the first time, the number one position globally as a generator of greenfield capital investment on new greenfield projects.
 
From January through April 2016, Chinese companies made or announced 126 new greenfield investments overseas totalling an estimated $29.43bn. Companies from the US have launched far more projects (661) but spent less ($22.81bn) on them.
 
By number of projects, China ranks sixth globally for this time period, but is ranked first by capital investment. 
 
The top destinations for Chinese capital during the period have been Mozambique, where an estimated $4bn investment is resulting from China National Petroleum’s plans to help establish a new natural gas pipeline; India ($3.8bn); Algeria ($3.43bn); France ($3.41bn) and Malaysia ($2.05bn).
 
Large mega-projects are driving these high-dollar figures. But the most popular destinations by number of projects have been India (20 projects) and the US (15), followed by a handful of countries that attracted four projects each. 
 
China National Petroleum is the largest outbound Chinese investor for January-April 2016, responsible for an estimated $6.73bn in new investments. This is followed by the Dalian Wanda Group ($4.3bn), China State Construction Engineering Corporation ($3.3bn), China Railway Engineering Corporation ($2.03bn) and China General Technology Group ($1.6bn). 
 
The most prolific in number of projects has been telecoms firm Huawei, for which fDi Markets has recorded five outbound new greenfield projects in the first four months of this year totalling an estimated $197m. Huawei is spreading its interests wide: destinations for these projects range from the UK and Poland to the US, UAE and Qatar. The company has also said it is exploring the Philippines market with an eye to establishing operations in Manila.
 
However, although China has pulled ahead as the top source country for brand new greenfield investments, the US still invests more overseas when expansions of existing facilities and co-locations are included.
 
When taking into account both new investments and reinvestments as well as co-locations — which fDi Markets’ published data typically encompass — the US remains the number one overall outbound investor globally, accounting for 889 projects totalling an estimated $36.52bn versus 138 at $30.06bn for China.
 
What this suggests is that while governments aiming to attract foreign direct investment should not ignore the reliable US market as a source of greenfield investment, they can also take some reassurance that Chinese companies are so far maintaining an appetite for exploring new investment destinations. 

FT
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