Global foreign investment fell last year by 13% to a total of 1.3 trillion dollars. According to UNCTAD’s latest World Investment Report, China’s outgoing investment fell by 18% from $158 billion in 2017 to $130 billion in 2018. This can be traced back to a combination of internal political decisions, as well as tighter scrutiny procedures in e.g. the USA and the EU. Outgoing investments from China continued to fall at the beginning of 2019. According to research by Grisons Peak LLP’s China Investment Research, they fell by 14.3% in the first quarter in comparison to the fourth quarter in 2018. In the M&A/Equity Investments category, there was even a reduction of 50.5%. In the second quarter of 2019, however, these investments increased slightly by 21.6% to $14.9 billion.
However, incoming foreign investments to China increased by a total of 4% in 2018. The investment volume from Germany alone rose by 79 %. In 2018, a total of 60,000 new companies were founded in China by foreign investors. The barriers to entry into the Chinese market have been regularly lowered in recent years. After the last change to the so-called negative list in 2015, there were annual adjustments in July 2017, 2018 and 2019. The negative lists indicate industries in which foreign investment is restricted. Meanwhile, the national negative list has been reduced to 40 items and the negative list for free trade zones to 37 items. There is also a catalogue of sectors in which investments are expressly desired and encouraged. The revised versions of these three documents will come into force on 07/30/2019 and may continue to increase investment.
All other regulations that are not included in the three documents are to be abolished by the end of 2019, so that foreign companies are treated equally with domestic companies. Above all, this should lead to an acceleration of approval processes for investments. In addition, the Chinese government announced that it would open up the financial markets even more to foreign investors and create more opportunities. Six new free trade zones are also planned.
In January 2020, the Foreign Investment Law passed in March 2017 will come into force, which also provides for far-reaching changes for foreign investors.
With information from: UNCTAD, Caixin Global, China.org.cn, China Investment Research, Investmentplattform China/Deutschland