BOFIT Weekly Review 2015/21
China’s FDI flows up in the first quarter
China’s foreign direct investment flows showed an overall increase in the first quarter of this year. Inbound FDI flows to China amounted to about $35 billion, up over 11 % from 1Q14. Outbound FDI flows from China increased 30 % y-o-y to $26 billion.
Although FDI flows from China have increased sharply over recent several years, they have yet to match inbound FDI flows to China. The difference in the amount of investment flows continues to narrow steadily, falling by half in the past year. When figures on the financial sector direct investments abroad are later compiled and included in outbound FDI, China’s investment outflows are nearly on par with investment flows into the country.
The growth in FDI inflows to China has slowed and even remained flat in the recent few years, reflecting both lower growth of the Chinese economy and global growth in recent years. As Chinese companies continue to actively increase their foreign direct investment, the inbound-outbound FDI gap should vanish.
The OECD reports that last year China was the biggest receiver of FDI, followed by the US. The overall stock of FDI in China will remain considerably larger than the total stock of Chinese FDI abroad for years to come.
Chinese FDI inflows and outflows, USD billion
Source: CEIC