Chinese investors at the gate

Reading Time:

Soon, the list of countries where Chinese investors are not going might be shorter than the list of places where Chinese companies are pursuing their ventures. Here is a subjective list of just some of the recent big announcements.

  1. FT: China to build two nuclear plants in Argentina in $15bn deal
  • SCMP: China's sovereign wealth fund to boost stake in Germany

  • BBC: China and South Africa in $6.5bn worth of deals (focus on building infrastructure)

  • SCMP: Beijing to build 12 new subway lines to help support growth as Chinese economy slows

  • Xinhua: China plans 31 bln USD investment for border zone with Laos

  • FT: Chinese companies eye Australia’s vast land sale

Chinese buyers are hatching bids for parcels of Australian land covering an area three-quarters the size of England complete with nearly 200,000 cattle, highlighting China’s growing demand for meat to feed its rising middle classes. China’s increasingly carnivorous diet has seen companies fork out almost $20bn on cross-border food deals in the past five years alone, according to Dealogic.

  • FT: String of UK deals to follow in Xi Jinping’s wake

China has promised to invest more than £6bn in the first UK nuclear power plant in a generation at Hinkley Point in Somerset on the second day of the UK state visit of President Xi Jinping.
China will own a third of the £18bn nuclear power station, which will be built by French energy firm EDF with a consortium led by Chinese state-owned nuclear company CGN.
... Over the past decade the UK has been the top destination for Chinese capital in Europe, having attracted $36.7bn of investment according to Dealogic — more than twice the $17bn put into Italy, ranked number two. France and Switzerland, with $15.5bn and $14bn, were next in line.
But in the past five years, the UK has fallen behind Italy in terms of Chinese investment. One Hong Kong billionaire, Li Ka-shing, has spent more in Britain than all investors from mainland China combined since 2010.

  • ECFR: The European interest in an investment treaty with China

[T]he rush for Chinese investment has spread from the periphery to the core. The UK leads the race, and even France is now aiming for Chinese investment in its infrastructure – for example, in December 2014, the French government announced the sale of a 49.9 percent stake in the Toulouse airport to a Chinese consortium, with Lyon supposed to follow.

Silk Road

EY: China sees outbound
investment boom (includes a summary of recent policies promoting outward FDI on page 4)

Some projects won't work

  • Gordon Orr: 5 Ways China’s State-Owned Enterprises Are Adapting to the Downturn

  • FT: Liverpool goes after Chinese investment

The original £175m scheme was an attempt to harness Chinese investment and to underpin the £4.5bn Wirral Waters development of offices, homes and warehouses on 500 acres of redundant dockland. It would have housed 1,000 Chinese companies wanting to do business in the UK in a tax-friendly zone.
Peel, the multibillion pound property group behind the plans, has ended a joint venture with its Chinese development partner Sam Wa “by mutual agreement” after several fruitless years attempting to recruit occupiers.

China will pilot a "negative list" approach, which identifies sectors and businesses that are off-limits or restricted for investment, in some regions from Dec. 1, 2015 to Dec. 31, 2017, authorities said on Monday.
The aim is to explore a system that could be replicated nationwide for application in 2018 as part of efforts to streamline government administration and give more freedom to the market, according to a published guideline. ... China first piloted the rules in the Shanghai Free Trade Zone in 2013.

  • Bloomberg: Chinese-Owned Company Sues Obama Over Wind Farm Project:

By failing to provide Ralls with sufficient notice and opportunity to be heard prior to prohibiting its acquisition of the wind farms and imposing extraordinary restrictions on the use and enjoyment of its property interests, CFIUS and the president have unconstitutionally deprived Ralls of its property absent due process,” the company said in the amended complaint. The challenge to Obama comes amid campaign charges by Republican challenger Mitt Romney that Obama has been too soft on China. Obama’s order blocking Ralls from acquiring the wind-farm assets was the first time in 22 years a president has blocked a transaction on national security grounds. Ralls, which is owned by executives of China-based Sany Group Co., was seeking to place Sany-made wind turbines at the Oregon installations after purchasing land and other rights earlier this year. The assets consist of four locations, all of which are near or within restricted Navy airspace, the Treasury Department, which heads CFIUS, said Sept. 28. The decision shouldn’t be viewed as a precedent for any other investment from China, Treasury said.

(The case was settled.)

  • Also from 2012: this story on companies are delisting from US market: "Perhaps in anticipation, China Development Bank, a state-run institution, has recently set aside more than $1 billion to help smaller firms leave American exchanges."

Longer perspective

Outward FDI roughly equals inward FDI:

Photo credit: Flickr

Accounts from Xi's anti-corruption drive

The latest issue of The Economist describes how much harder it is to recruit people for local public sector jobs: Since 2013, seven of the 13...

Sovereign wealth funds should support efficient infrastructure

Investment rules and restrictions are a rarely discussed barrier for financing of low-carbon projects. For example, the largest sovereign wealth fund “cannot take a direct stake...