FREE NEWSLETTER: Econintersect sends a nightly newsletter highlighting news events of the day, and providing a summary of new articles posted on the website. Econintersect will not sell or pass your email address to others per our privacy policy. You can cancel this subscription at any time by selecting the unsubscribing link in the footer of each email.

posted on 11 February 2015

Chinese Capital Outflow Is Accelerating

Written by , GEI Associate

With the slowdown and uncertainty of global economy and more and more developed countries accelerating their industrial restructuring - has brought opportunity for Chinese investors to create offshore business ventures. According to the report from Bloomberg, China saw the biggest capital outflow in the final quarter of 2014 since 1998, and is estimated to accelerate in the coming years.

There seems to be two main reasons which lead to the capital flow deficit.

  • China has been facing the situations that economy slows and RMB weakens. Nevertheless, Chinese enterprises grow fast, they possess the strength and willingness to invest overseas - not only in emerging economies but also developed economies which are willing to accept investment from Chinese corporations.
  • Chinese government has also been encouraging domestic companies to play a more important role in global markets. The Chinese government continues to improve policy supporting foreign investment. Also the government broadens channels for foreign exchange reserve allowing domestic enterprises to issue stocks and bonds abroad.

Is there any doubt that the growth of Chinese capital outflow presents win-win situation to both China and global economy? For foreign economies, investments from China effectively stimulate their economic growth and promote employment. For China, Chinese enterprises are able to learn advanced ideas and strategies of business management, promote brand awareness, resolve the problem of excess production capacity, and drive balanced development of international trade.

In recent several years, one of the most significant features of Chinese capital investment abroad is the expanding scope of industries. Finance, real estate, infrastructure, agricultural products and technology become the most popular industries which attract capital investment from China. Moreover, according to the latest news, Chinese capital investment has developed to international sports industry, Dalian Wanda scored a 20% stake in well-known world top soccer club: Atletico Madrid.

Although China's foreign capital investments present booming development, China is cognizant of the possible risks they have to face.

  • First, China's foreign capital investments may encounter huge political risk. Base on the high percentage of government investment overseas, China must consider not only market return but also political interest. For example, China has quite high percentage of investment in Venezuela. However, due to the continuous lower oil price during the past year, Venezuela has announced default to several creditor governments, and China may be the next one.

  • Second, China may also face the risks from foreign governments' fiscal or monetary policy. Take real estate industry in British market as an example, British government executed quantitative easing monetary policy after financial crisis. Although the policy plays an important role in economic recovery, it pushed UK housing price higher. Currently the UK average housing prices have again reached historical highs. According to the prediction that Bank of England will raise interest rates in coming years, real estate market may encounter large volatility. Britain is the China's largest foreign investment market in Europe.

Click here for Historical News Post Listing

Make a Comment

Econintersect wants your comments, data and opinion on the articles posted. You can also comment using Facebook directly using he comment block below.

Econintersect Contributors


Print this page or create a PDF file of this page
Print Friendly and PDF

The growing use of ad blocking software is creating a shortfall in covering our fixed expenses. Please consider a donation to Econintersect to allow continuing output of quality and balanced financial and economic news and analysis.

Take a look at what is going on inside of
Main Home
Analysis Blog
Men Without Work
Slow Economic Growth Will Be Around For A Long Time
News Blog
American Doctors: The Prognosis Isn't Good
Brexit: 'Leave' Voters Showing Most Signs Of Doubt
Crumbling Comet? The Great Debate About Whether Rosetta Rock 67P Is Breaking Apart
ISIS: Income Has More Than Halved Since 2014
What We Read Today 29 March 2017
The Best Hilarious Prank Ideas For April Fools' Day
February 2017 Pending Home Sales Index Improves?
The Need For Very Low Interest Rates In An Era Of Subdued Investment Spending
America's Missing Workers Are Primarily Middle Educated
The Share Of American Women In The Labor Force Is Slipping Even As It Rises In The Rest Of The Developed World
Infographic Of The Day: Which Countries Are Going In The Right Direction
Early Headlines: Asia Stocks Mixed, Dollar, Oil Up, Gold Down, Article 50 Day, Westinghouse Files Ch. 11, Trump Wants $1B To Start Wall, Russian Protests, China's $8T Shaky Debt, And More
Thirty Plus Terror Suspects And Convicts Not A Rare Occurrence In UK
Investing Blog
Where In The World To Invest? A Search Of The Globe
Boom Or Bust: Tech IPOs Can Go Either Way
Opinion Blog
Scarborough Shoal: Will America Help The Philippines?
Why Did Preet Bharara Refuse To Drain The Wall Street Swamp?
Precious Metals Blog
Following The Yellow Brick Road
Live Markets
29Mar2017 Market Close: DOW Closes Down 42 Points, SP 500 Up At Close, Nasdaq Clearly The Winner Closing Up 0.4 Percent, Wall Street Investors Happy
Amazon Books & More

.... and keep up with economic news using our dynamic economic newspapers with the largest international coverage on the internet
Asia / Pacific
Middle East / Africa
USA Government



Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day


Asia / Pacific
Middle East / Africa
USA Government

RSS Feeds / Social Media

Combined Econintersect Feed

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution



  Top Economics Site Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2017 Econintersect LLC - all rights reserved