US Most Favoured for Outbound China Cash

The American Enterprise Institute's report on outbound Chinese investment shows a continued increase through H1 2015, with a total of $55.9 billion invested worldwide, up 14% y-o-y, compared with H1 2014.

China's Outbound Investment Universe (US$ Billions)

Source: American Enterprise Institute: China's investment in the world increasing, not soaring, July 2015

Top recipients during H1 2015 included the United States, Italy, the Netherlands, Australia and South Korea, while previous top recipients such as Brazil, saw a decline. Energy and metals producers, such as those in resource-rich Brazil, were less favoured by Chinese investors as they switched their attention to finance, transport and real estate purchases.

Looking ahead, Derek Scissors - the report author - expects outbound investment from China to increase but changing underlying trends will dictate the direction of spending:

  • Energy investment growth will slow due to a weaker economic outlook, lower valuations for energy assets and suspected corruption in the oil industry.

  • Energy investments will diversify to include tight oil, natural gas and alternative energy

  • Investment in transport will pick up as China expands its infrastructure network across Asia and directs its transport and infrastructure development companies to pursue more projects overseas

  • Real estate investments will shift toward tourism as Chinese developers move to cater to increasing outbound tourism from China.

  • The United States will remain the top recipient of Chinese investment as mainland China businesses diversify into agriculture, finance, property, shale and tourism.

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