China will become the world's second-largest acquirer this year after the United States with surging outbound direct foreign investment, according to a Chinese Academy of Social Sciences report issued Sunday.

In the first 11 months, China's non-financial outbound foreign investment was US$47.5 billion, 1.1 times the total value of last year, according to the Ministry of Commerce data. In 2003, the figure was just US$2.8 billion.

"Despite the country's continued efforts to attract foreign investment, China has been in transition from the acquired to an acquirer," said Zhang Yuyan, chief author of the report. "It is based on China's solid economic development and many good opportunities offered by the global financial crisis."

China eclipsed Japan to become the world's second-largest economy in the first half of the year and is on its way to claim the position for the whole year.

In August, the Zhejiang Geely Holding Group took over Volvo from the Ford Motor Co for US$1.5 billion, putting China's "going global strategy" into headlines across the world. Last week, China Petrochemical Corp, better known as the Sinopec Group, won government approval to purchase oil and gas assets in two deals in South America.

Commerce Minister Chen Deming said last week that China will support domestic companies to invest overseas and the "going global strategy" will be a priority for the ministry in the 12th Five-Year Plan starting next year.

Zhang said mergers and acquisitions in the energy sector so far still make up the majority of China's outbound takeovers, but the tendency is that targets of investment will become more diversified.

From 2005 to the first half of this year, Chinese enterprises clinched 91 deals worth US$31.9 billion with overseas coal and mineral partners, the report said.

It predicted China's two-way investment will become more balanced in the future. In the first 11 months, China's inbound foreign direct investment was US$91.7 billion, far exceeding the outbound figure. This year's overall outbound investment is expected to rise to US$50 billion.

(Shanghai Daily December 27, 2010)