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EY: China's 2016 outbound FDI to exceed US$170 bln / by Guo Xiaohong, September 30, 2016 Adjust font size:

China's outbound foreign direct investment (FDI) in 2016 is expected to exceed US$170 billion, hitting a record high, said EY in its 4th related report, released yesterday in Beijing.

In the coming years, China's overseas investment will continue to rise and maintain a double-digit growth rate, according to the report "China Go Abroad -- Key connectivity improvements along the Belt and Road in telecommunications & aviation sectors."

"Chinese enterprises are performing remarkably well in the global investment market in 2016," said Loletta Chow, Global Leader of EY's China Overseas Investment Network (COIN). "As a net capital exporter, China's outward investment has exceeded inward investment."

Chow attributed this to the implementation of the ‘going out' strategies, the accelerated internationalization of Chinese enterprises and the demand for overseas assets, especially dollar assets, under the depreciation pressure of renminbi.

With the "Belt and Road" initiative and other strategies serving as a powerful engine, more Chinese enterprises are expected to invest overseas.

Official data shows that China's non-financial outward FDI reached US$118 billion in the first eight months of 2016, an increase of 53.3% year-on-year.

The report also predicts that Chinese telecom enterprises will have great potential for development in developing countries along the Belt and Road. Aviation manufacturing is likely to become another business card in China's high-end manufacturing industry "going out" process, following the successes of high-speed rail and nuclear power.

Encouraged by a series of government policies, Chinese telecom enterprises have taken active actions to accelerate their overseas expansion. In April 2016, Sharing Mobile, a Chinese virtual network operator, acquired an 80% stake in a Nigerian telecoms operator for US$200 million.

According to the EY report, apart from the growth of international routes and transport capacity, Chinese enterprises have also made overseas investments in areas such as aviation infrastructure, aircraft manufacturing and air services.

Yet, EY, a global leader in assurance, tax, transaction and advisory services, also pointed out the risks behind the "going-out" strategy, including financial and market risks.