China smashes annual outbound investment record

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With China’s continued purchasing of overseas properties, Chinese investment continues to smash the annual outbound investment record.

As of May, China’s outbound mergers and acquisitions topped $100 billion. In 2015 along, Chinese investment only totalled $108bn. That figure has been blown away by 2016’s $111bn, a total that was accumulated in only five months. The figures on China’s outbound investment came from Swiss-based investment bank UBS.

The 2015 investment figure was the highest outbound number to be posted. However, that has been smashed already this year.

Samson Lambert Lo, managing director and head of mergers and acquisitions at UBS. Recently spoke about the development in Chinese investors.

“We’ve noticed that Chinese buyers have become more sophisticated and bold in their outbound investments,” Lambert Lo stated.

Dealogic, in a report released in April, said that China had overtaken the United States as the globe’s largest “acquiring nation” in the technology industry. China now accounts for 45% of acquisitions in the technology sector.

Chinese companies are investing heavily in a diversified portfolio of industries outside of China. These industries range from healthcare to technology, although property investments have become one of Chinese investors’ favourite purchases.

Despite the investment abroad by Chinese firms, the Chinese government is still trying to stem money flowing out of the country.

While Beijing is attempting to stop money from leaving China so easily, Deloitte China has stated that China’s policy on global enterprise has not changed. Deloitte’s Patrick Yip recently spoke about the government’s continued effort to invest abroad.

“The fact that [companies] need to get approval means that the government continues to give a nod to these types of activities. It just wants to avoid confusion in the marketplace,” Yip explained.

Chinese investment’s effect on the US

At the start of 2016, nearly 2000 Chinese-affiliated companies were operational in the US. The companies employed nearly 100,000 people. The effect of pulling out of such investment in the US would result in massive job loss that could affect numerous industry sectors.

Despite Republican presidential candidate Donald Trump continually stating that jobs are leaving the US, Chinese investment into the country is proving otherwise. The National Committee on US-China Relations and the Rhodium Group’s Stephen Orlins recently wrote in the committee’s report that:

“While much of this year’s political campaign rhetoric has focused on jobs leaving the United States, Chinese investment is supporting more and more jobs this side of the Pacific.”

Chinese investors continue to buy into companies around the world. One of the biggest moves thus far in 2016 was China’s National Chemical Corporation agreeing to buy Swiss company Syngenta for $43bn. Once it goes through, it will become China’s biggest overseas purchase to date.

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