Going Out - the global dream of a manufacturing power
2016 China Outbound Investment Outlook
In 2015, China implemented the “One Belt One Road” national strategy, which has had remarkable success and generated a new wave of overseas investment.
China invested USD 14.8 billion in countries along the Belt and Road in 2015, up 18.2% from the previous year. Simultaneously, outward foreign direct investment (FDI) from the machinery manufacturing industry grew by 154.2% in the same year.
In 2016, due to the global financial markets unrest and continuous weak economic growth in emerging markets, the international investment environment becomes more complex and uncertain. However, in the first quarter of 2016, numerous Chinese enterprises entered into many significant overseas acquisitions and two of the biggest deals year to date by Chinese enterprises were announced: ChemChina’s acquisition of the Swiss giant Syngenta for more than USD 43 billion and Tianjin Tianhai Investment (a subsidiary of HNA Group)’s acquisition of Ingram Micro for USD 6.3 billion in the US.
China’s outbound investment likely to hit another historical high
According to China’s 13th Five-Year Plan, which focuses on innovative and all-round opening-up development, more Chinese enterprises are expected to “Go Global” to upgrade their technology and develop international capacity cooperation. As a result, we believe China’s outbound investment is likely to hit another historical high in 2016.
2015 was special for Chinese investors. Due to the unrest in the global market, China’s economic growth rate has been slowing. China’s economy grew by 6.9% in 2015, the lowest in the last five years. However, China’s outward FDI grew by 13.3% in 2015, hitting a historical high of USD 139.5 billion.
Over the past five years, China’s average annual economic growth has been 7.4%, but its outward FDI CAGR reached as high as 16.9%. EY predicts China’s growing outbound investment would become the key driver of future domestic economic growth and acceleration of the globalization.