China’s Provincial Outbound Direct Investment in 2011

Posted by Reading Time: 3 minutes

By Julia Gu

Apr. 6 – China’s Minister of Commerce recently called for and chaired a special meeting where members not only discussed standard administrative methods and development plans for foreign trade, but Chinese outbound direct investment (ODI), as ODI has become a new, growing part of the economy.

According to the state news agency, People’s Daily, China aims to balance its “go global” and “opening up” initiatives by accelerating regional cooperation and economic development as well as overseas investment.

The Ministry of Commerce reports that China’s non-financial ODI grew 1.8 percent in 2011 to US$60.07 billion with direct investments from Chinese businesses in 3,391 enterprises across 132 countries and regions around the world.

China’s ODI through mergers and acquisitions (M&As) remained strong with US$22.2 billion, accounting for 37 percent of total ODI. M&A deals in Europe by Chinese investors surged 154 percent to US$10.4 billion from US$4.1 billion in the previous year.

Meanwhile, ODI from local provincial companies came in at US$20.3 billion, accounting for 33.4 percent of total non-financial ODI in the same period and representing an increase of 24.4 percent from 2010. Central China’s ODI in this sector grew 64.1 percent year-on-year, making the region the fastest growing area in outward investment, while investment from West China showed strong potential with a year-on-year increase of 42.9 percent. However, China’s major GDP engines in the Yangtze River Delta and Pearl River Delta – including Zhejiang, Shandong, Jiangsu, Guangdong and Shanghai – took the lead in outward investment.

We break down China’s US$20.3 billion in non-financial ODI from local areas on a province-by-province basis in the map and table below. However, it is important to note that these figures represent only direct investments made by large private enterprises and by local government-owned companies, and are not indicative of the country’s entire ODI levels. In particular, ODI from China’s major Beijing-controlled SOEs (such as Sinopec, State Grid, CNOOC) and the US$22.2 billion from M&As described above are not included in these graphics.

Dezan Shira & Associates is a boutique professional services firm providing foreign direct investment business advisory, tax, accounting, payroll and due diligence services for multinational clients in China, Hong Kong, India, Singapore and Vietnam. For further information, please visit the firm’s web site, E-mail, or download their brochure here.

Related Reading

Doing Business in China
Our 156-page definitive guide to the fastest growing economy in the world, providing a thorough and in-depth analysis of China, its history, key demographics and overviews of the major cities, provinces and autonomous regions highlighting business opportunities and infrastructure in place in each region. A comprehensive guide to investing in the country is also included with information on FDI trends, business establishment procedures, economic zone information, and labor and tax considerations.

The Greater Pearl River Delta: Business Guide to South China (Fourth Edition)
In this newly-released edition of our regional business guide to South China, we offer business-minded individuals an up-to-date reference source for all of the key issues concerning setting up and successfully operating a business in South China.

The Yangtze River Delta: Business Guide to the Shanghai Region (Fourth Edition)
This guide takes a practical, city-focused approach, walking you through the economy of important cities in the region with a level of specificity available through few other English sources. Its pages overview the region from a business standpoint, examine the economy of the region’s provinces and prominent cities in depth, and introduce the basics of establishing a business in the region.

New Complimentary China City Guides Available from Asia Briefing

China’s Provincial GDP Figures in 2011

China’s Provincial Retail Statistics for 2011

Minimum Wage Levels Across China