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China’s overseas investments expand 6.5% in 2009; 40% forecasted in 2010

Saturday, January 16th 2010 - 07:01 UTC
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China has been keen to buy resources around the world China has been keen to buy resources around the world

China's overseas investment in non-financial sectors rose 6.5% last year from 2008 despite the economic downturn, the government said Friday, as the nation kept up its global hunt for resources.

Overseas investment in mining, manufacturing and other non-financial sectors reached 43.3 billion US dollars last year, Commerce Ministry spokesman Yao Jian said at a news conference in Beijing.

The growth, however, was far more modest than a 63.6% annual jump in 2008, when investment hit 40.65 billion USD.

“Acquiring foreign advanced technologies, distribution networks and energy and resources became the new focus of acquisition investment” the ministry said in a statement after the briefing.

The pace of buying picked up sharply in the second half of 2009 as the worst of the crisis seemed to be over, after diving by 51.% year-on-year in the first half, previous official data showed.

China has been keen to buy resources around the world as it seeks to take advantage of falling prices in the global downturn and to secure energy supplies for its economic expansion.

Most of China’s overseas investments, 40%, (17.5 billion USD) were in the form of fusions or acquisitions and the tendency is expected to increase further in the future.

“A 40% jump in China’s foreign investments can be expected in 2010 as Chinese entrepreneurs become more confident” according to a report from Pricewaterhouse-Coopers.

Following the real estate bubble crash in Dubai last December, a high Chinese official said it was a chance “to buy oil and gold reserves”.

Chinese corporations have advanced profoundly in areas which had not been anticipated: the automotive industry, having become in 2009 the world’s leading sales market with 12 million vehicles (displacing the US) and purchasing subsidiaries such as Hummer (from General Motors) and the Volvo affiliate from Ford.

In natural resources the main operations involved the purchase of Addax Petroleum by China’s Sinopec with an investment of 7.2 billion USD. This was also the second largest overseas operation since 2008 when Chinalco (aluminium) became a partner of the giant minerals corporation Rio Tinto.

Categories: Economy, International.

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